Reports suggest that Hong Kong is deliberating the inclusion of an Ethereum staking option for spot Ethereum exchange-traded fund (ETF) issuers, potentially opening avenues for passive income generation for investors.
Should the Securities and Futures Commission (SFC) of Hong Kong greenlight staking, investors in local Ethereum (ETH) ETFs could engage in staking activities on the Ethereum network, thereby earning rewards for validating transactions.
Staking involves token holders locking their crypto tokens for a specified duration, earning rewards as a percentage of the staked tokens. This process, facilitated by various third-party staking services, enables users to earn rewards while holding onto specific cryptocurrencies.
Hong Kong’s move diverges from the United States Security and Exchange Commission’s (SEC) stance on staking, which considers it an investment contract and a potential violation of securities laws. A global adoption of spot ETF staking could ignite further discussions on the practice within the United States.
In the U.S. context, Coinbase has been actively advocating for staking and has been engaged in a legal battle with the SEC over its legality. Coinbase asserts that core staking does not constitute a security, as it does not involve an investment of money, and the rewards received are compensation for services rendered.
Recent data from crypto.news indicates strong investor optimism towards staking, with 55% of crypto investors in Singapore reportedly engaging in staking activities through centralized exchanges. Staking also enjoys popularity in other global crypto hubs.
In a noteworthy development, the U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) on Wednesday, signaling a favorable stance towards the crypto industry. Additionally, the SEC’s approval of spot Ethereum ETFs has propelled the price of Ethereum (ETH) above $3900 at the time of reporting.
However, despite these positive developments, many U.S.-based companies, such as Fidelity Investments, have refrained from incorporating staking in their forthcoming Ethereum ETFs, citing concerns related to the SEC’s stance on the matter.
