Hong Kong asset managers are actively working to incorporate staking into their spot Ethereum exchange-traded funds (ETFs), with the goal of getting the staking reward feature approved within this year, according to Yat Siu, Chairman of Animoca Brands.
In an interview with The Block, Siu shared that Hong Kong is currently engaged in discussions regarding Ethereum staking. He emphasized that it is highly probable that Asia, particularly Hong Kong, will approve staking for Ethereum ETFs before the United States does, considering this outcome “almost a foregone conclusion.”
Yat Siu, Chairman of Animoca Brands, expressed optimism about the possibility of Hong Kong approving staking within spot Ethereum exchange-traded funds (ETFs) by the end of this year.
He mentioned that discussions on Ethereum staking are already taking place in Hong Kong, and he believes the likelihood of Asia approving staking before the U.S. is high. Siu noted that if there isn’t significant progress on staking within the year, the U.S. election outcome might influence the speed at which staking approvals could happen in the United States.
Meanwhile, HashKey, which co-manages two spot Bitcoin and Ethereum ETFs in Hong Kong with Bosera, is actively working on integrating Ethereum staking into their funds. Livio Weng, CEO of HashKey Exchange, explained that they have developed a plan aimed at earning staking rewards without significantly increasing risks.
Although specific details of the proposal are still under discussion and cannot be disclosed at this time, Weng emphasized that the strategy is designed to balance rewards and risks effectively.
Overall, both Siu and Weng highlight the proactive steps being taken in Hong Kong to advance the integration of staking into Ethereum ETFs. Their efforts reflect a broader trend of innovation in the region’s financial markets, positioning Hong Kong as a potential leader in crypto ETF developments ahead of the U.S. If successful, these initiatives could pave the way for more robust and diversified investment opportunities in the cryptocurrency space.
Livio Weng, CEO of HashKey Exchange, stated that they aim to explore Ethereum staking in a compliant and controlled manner, ensuring that risks are not increased. Their goal is to advance these explorations responsibly and securely.
Additionally, Blockdaemon, a blockchain infrastructure provider, is in discussions with Hong Kong ETF issuers and custodians about the potential to offer staking services for these ETFs. Glenn Woo, head of sales for the Asia-Pacific (APAC) region at Blockdaemon, confirmed these talks, indicating that they are exploring ways to support the integration of staking within Ethereum ETFs in Hong Kong.
Glenn Woo, head of sales for APAC at Blockdaemon, shared insights from his recent discussions with various industry participants, including issuers, virtual asset trading platforms (VATPs), and custodians. He noted that there is a generally positive outlook among these stakeholders regarding the approval of Ethereum staking for ETFs.
Woo emphasized that the industry aims to get the staking feature approved by the end of the year. He highlighted that many participants see staking as the critical missing component in the current offerings, and there seems to be a consensus that incorporating staking is essential for the market’s growth and development.
Glenn Woo expressed optimism about the imminent approval of Ethereum staking, stating, “I’m quite hopeful that it’s going to materialize fairly soon.” He mentioned that Blockdaemon has already provided staking services for some European exchange-traded products, demonstrating their capability in this area.
Meanwhile, Hong Kong’s Securities and Futures Commission did not immediately respond to The Block’s request for comment on this matter.
What sets Hong Kong apart in terms of competitiveness?
Despite the initial excitement surrounding spot crypto ETFs in Hong Kong, their performance has fallen short in comparison to their U.S. counterparts.
On Thursday, the total daily trading volume for the three Hong Kong spot bitcoin ETFs amounted to $6.08 million, following $2.24 million on Wednesday and $1.96 million on Tuesday, according to data from The Block’s dashboard. In contrast, the 11 spot bitcoin ETFs in the U.S. saw a total trading volume of $1.42 billion on Thursday, after $2.09 billion on Wednesday.
Yat Siu of Animoca acknowledges Hong Kong’s potential to attract buyers from both the east and west but underscores the importance of competitiveness. He suggests that for Hong Kong to excel in this domain, its ETFs must be priced at least comparably, if not more competitively, than their U.S. counterparts.
The inclusion of staking rewards could give Hong Kong spot ether ETFs a competitive edge over their U.S. counterparts, particularly as the U.S. Securities and Exchange Commission (SEC) currently prohibits such a feature.
According to Yat Siu, staking has the potential to set Hong Kong ETFs apart significantly, representing a crucial advancement for the industry and a potential game-changer for the Hong Kong market.
Glenn Woo of Blockdaemon echoes Siu’s sentiments, highlighting investor interest and the deterrent effect of the absence of a staking feature for potential Ethereum ETF buyers. He emphasizes the significant opportunity cost, estimated to be around 3% to 4%, of not having staking available.
Woo highlighted the Hong Kong government’s awareness of the situation, indicating a proactive stance towards addressing the gap. “There’s a collective effort from the Hong Kong government and regulatory bodies to streamline processes,” he emphasized. “It’s imperative to ensure clear communication and transparency in educating regulators about ETF issuers’ staking strategies.”
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