ChinaAMC launches Hong Kong’s second Ethereum ETF and adds staking function
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Hong Kong's Securities and Futures Commission recently amended its rules to allow certain institutions to offer crypto staking services, aiming to make Hong Kong a Web3 hub.
China Asset Management is about to launch staking services for its Ethereum (ETH) ETF, becoming the second fund in Hong Kong to offer such services. OSL Digital Services (OSL) will provide custody and staking infrastructure for the fund.
According to OSL's announcement, the staking feature will go live on May 15, transforming the ETF from a purely passive investment tool to an "active participant" in the Ethereum ecosystem. China Asset Management, a subsidiary of China Asset Management (ChinaAMC), first launched its Ethereum ETF in April 2024.
The Hong Kong Securities and Futures Commission (SFC) amended its rules on April 7 to allow entities including centralized exchanges to provide crypto staking services, aiming to make Hong Kong a leading city in the Web3 field.
In announcing the rule change, the SFC said: “We recognize the potential benefits of staking in enhancing blockchain network security and allowing investors to earn returns.”
Staking is the act of locking cryptocurrency tokens on a blockchain network to support the network’s operations and security. In return, participants are typically rewarded in the form of more cryptocurrency.
On April 10, Bosera HashKey became the first staking service provider approved under the new rules. According to the press release, staking will enable Bosera HashKey’s Ethereum ETF to take advantage of compound growth, as returns from staked Ethereum can be reinvested into the financial instrument.
According to Coinbase, Ethereum stakers currently earn an average of about 2.14% per year.
Hong Kong Modifies Rules to Become Web3 Hub
The issue of staking for Ethereum ETFs has been a focus of discussion in the United States. In December 2024, Bernstein Research predicted that staking would be approved for Ethereum ETFs under the crypto-friendly Trump administration. Since then, CBOE and the New York Stock Exchange (NYSE) have applied to the U.S. Securities and Exchange Commission (SEC) for rule changes to allow staking in such funds.
Asset management firm BlackRock said that while Ethereum ETFs have been successful, they have not performed perfectly without staking. Staking is seen as a way to attract more investors to Ethereum ETFs, as investors may be attracted by the possibility of returns, leading to further growth.
Hong Kong's Securities and Futures Commission (SFC) has apparently realized this and is acting accordingly. "The SFC's announcement means that more opportunities are opening up - not just staking, but also more Web3 products will be formed under a regulated and trusted framework," Chen Wu, CEO of Hong Kong cryptocurrency exchange Ex.io, told Cointelegraph in an interview.
Hong Kong's blockchain industry has grown by 250% since 2022, and the city's fintech market is expected to exceed $600 billion by 2032. The Hong Kong government is seen as having a positive cryptocurrency policy, which is in stark contrast to the confrontational attitude taken by some other governments towards this emerging asset class.
