Exploring Ethereum ETFs in Hong Kong
The Securities and Futures Commission (SFC) in Hong Kong is currently weighing the possibility of allowing issuers of Ethereum ETFs to introduce Ether staking, as revealed in a recent report by Bloomberg. This potential development has attracted significant attention due to its potential implications on the outlook of Ethereum ETFs in Hong Kong.
“The SFC’s consideration follows their recent approval of a Bitcoin ETF, which occurred three months after the U.S. gave the green light to ten spot ETFs.”
The approach being taken by the SFC stands in stark contrast to the perspective of the US Securities and Exchange Commission (SEC). The SEC considers staking services as investment contracts, raising concerns about potential violations of securities laws.
The Changing Landscape of Crypto Regulation in the US
Last year, the SEC’s classification of staking services as securities prompted platforms like Kraken Exchange to cease their staking services within the U.S. However, Coinbase is actively challenging this viewpoint. In March 2023, they filed a “Petition for Rulemaking,” contending that fundamental staking, which lacks a direct monetary investment and does not qualify as an investment due to opportunity costs, should not be deemed a security.
“The recent amendments made by major financial institutions, such as Fidelity, removing staking from their latest S1 filing for a spot Ethereum ETF, highlight the regulatory uncertainties surrounding staking services.”
On May 22, the US House of Representatives approved the FIT21 Act, a legislation favorable to cryptocurrencies. This act aims to transfer the oversight of cryptocurrency from the SEC to the Commodity Futures Trading Commission (CFTC), a move that signals a more favorable stance towards the crypto industry.
Under the FIT21 Act, crypto operators in the US could potentially enjoy increased flexibility, and digital assets are likely to be categorized as commodities rather than securities. This potential shift is significant as it might result in the reclassification of crypto staking, potentially paving the way for the approval of Ethereum ETFs in the US. However, the future of the FIT21 Act remains uncertain as it still needs approval from the Senate and the President’s signature to become law.
