Hong Kong’s Securities and Futures Commission Considers Ether Staking for Ethereum ETFs
Hong Kong’s Securities and Futures Commission (SFC) is contemplating the possibility of allowing issuers of Ethereum ETFs to provide Ether staking services, as reported by Bloomberg.
This potential development has garnered significant attention due to its potential impact on the future of Ethereum ETFs in Hong Kong. The SFC’s consideration of this move comes after their recent approval of a Bitcoin ETF, following the U.S. approval of ten spot ETFs.
Contrasting Approaches: Hong Kong SFC vs. US SEC
The approach taken by the SFC stands in stark contrast to that of the US Securities and Exchange Commission (SEC). The SEC considers staking services as investment contracts, which could potentially violate securities laws. This perspective is evident from recent changes made by major financial institutions like Fidelity, who excluded staking from their latest S1 filing for a spot Ethereum ETF.
Last year, the SEC’s classification of staking services as securities led platforms like Kraken Exchange to cease their staking services in the U.S. However, Coinbase is challenging this stance. In March 2023, they submitted a “Petition for Rulemaking,” arguing that core staking, which lacks a direct monetary investment and does not qualify as an investment due to opportunity costs, should not be treated as a security.
Potential Impact of the FIT21 Act on Ethereum ETFs in the U.S.
On May 22, the US House of Representatives passed the FIT21 Act, a crypto-friendly legislation proposal. This act suggests transferring cryptocurrency oversight authority from the SEC to the Commodity Futures Trading Commission (CFTC), an agency known to be more favorable towards the crypto industry.
Under the FIT21 Act, crypto operators in the U.S. could enjoy increased freedoms, and digital assets might be reclassified as commodities rather than securities. This potential shift is significant as it could pave the way for the approval of US Ethereum ETFs by potentially reclassifying crypto staking. However, the FIT21 Act still needs approval from the Senate and the President’s signature to become law, leaving its future uncertain.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
