Author: Senior Researcher Jason Jiang, OKLink Research Institute
Hong Kong has taken another important step in promoting the compliance of virtual asset financial products. On April 7, the Hong Kong Securities and Futures Commission (SFC) officially issued a circular, clearly allowing virtual asset spot ETFs to participate in on-chain staking activities under a prudent regulatory framework. At the same time, it has also relaxed relevant restrictions on virtual asset trading platforms, allowing licensed trading platforms to provide staking services to customers. This follows the approval of virtual asset ETFs for listing and trading in 2024, marking another substantial key step in Hong Kong's exploration of a compliant Web3 financial system. This not only helps enhance the attractiveness of Hong Kong's virtual asset ecosystem but also represents the first time that traditional financial products are combined with the native mechanisms of the on-chain economy, providing a highly demonstrative model for global virtual asset regulation and financial innovation.
1. Introducing Staking into the Traditional Financial System, Creating a Compliant On-Chain Yield Path
The staking mechanism has become one of the most important on-chain economic activities in the virtual asset ecosystem, especially for public chains that adopt the Proof of Stake (PoS) consensus mechanism. It not only maintains network security and normal operation but also serves as the main channel for institutions and users to obtain on-chain yields. According to incomplete statistics from OKG Research, as of early April 2025, over 34 million ETH had been staked on the Ethereum network, accounting for 28.03% of its total supply; the staking rates for projects like Cardano and Solana have also long maintained above 70%. This indicates that staking, as a widely accepted on-chain yield mechanism, has a strong market consensus foundation.
According to the latest circular, Hong Kong's virtual asset spot ETFs can participate in on-chain staking with their held virtual assets under a framework with prudent safeguards to obtain native yields associated with blockchain networks like Ethereum. This move sends at least two signals: first, Hong Kong recognizes staking as a core mechanism for obtaining network incentives within the public chain ecosystem, possessing reasonable economic logic; second, regulatory agencies' understanding of the technology and risk management capabilities related to virtual assets and the Web3 ecosystem are maturing.
To ensure that risks are controllable, the circular stipulates that spot ETFs participating in staking must operate and custody staked assets through licensed trading platforms and authorized institutions, and sets a cap on the staking ratio to manage liquidity risks, ensuring asset independence and security. Additionally, ETF managers must fully disclose key information such as the staking operation mechanism, yield calculation model, potential risks, and the cap on staking ratios to protect investors' right to know and asset rights.
It is worth noting that due to the "Guidelines for Virtual Asset Trading Platforms" issued in June 2023, which stipulate that licensed trading platforms "should not make any arrangements with their customers to use the virtual assets held by customers on the platform or other related entities to generate returns for customers or any other parties," the Hong Kong SFC also released a circular on the same day regarding the provision of staking services by virtual asset trading platforms, revising previous restrictions on trading platforms and clearly allowing them to provide staking services to customers. The circular does not restrict the types of virtual assets that can participate in staking, which also means that, in addition to ETH, platforms are expected to compliantly launch staking services for public chain projects like Cardano and Solana. These changes will not only expand the service boundaries of trading platforms, allowing licensed platforms to provide value-added services to enhance user stickiness and trading volume, but more importantly, provide a reliable and compliant execution environment for spot ETFs participating in staking.
For virtual asset spot ETFs, the essence of staking is the "reuse" of underlying assets, which can create additional yields without affecting the ETF share structure, providing more users and institutions with a compliant "on-chain yield channel." The introduction of the staking mechanism will significantly enhance the attractiveness and scale of virtual asset spot ETF products. Traditional ETFs rely on asset price fluctuations or dividends for returns, while the introduction of the staking mechanism will make virtual asset spot ETFs not just passive trackers of price trends but active yield-generating "on-chain equity certificates." The additional annualized yield of 3%-6% brought by staking will become an important factor in attracting institutional investors, family offices, and other medium to long-term funds. It is expected that within the next 6 to 12 months, as the staking mechanism gradually takes shape, the management scale of Hong Kong's virtual asset spot ETFs is likely to achieve structural growth.
At the same time, the revenue-sharing mechanism for staking yields will broaden the revenue structure between fund managers and custodial institutions, incentivizing more market participants to design innovative product structures within a compliant framework, further enhancing the differentiation and competitiveness of virtual asset-related products in Hong Kong. Additionally, since staking operations require high asset security and technical stability, the potential demand for compliant staking will compel Hong Kong to accelerate the construction of virtual asset infrastructure, promoting the formation of a more mature and complete Web3 ecosystem.
2. Building a Revenue Link Bridge Between Traditional Finance and On-Chain Economy
Hong Kong's recent approval of staking services is not merely a regulatory relaxation but reflects a deeper consideration in institutional design: promoting the Hong Kong virtual asset market towards a more mature and international development stage while ensuring investor rights and risk control.
The primary motivation lies in strengthening and optimizing the operational mechanism of the local ETF market. Since Hong Kong approved the first batch of virtual asset spot ETFs for listing and trading in 2024, although the market response has been rational and the product mechanisms robust, the overall trading activity and asset management scale have not yet met market expectations. The lack of an endogenous yield mechanism has made these products appear relatively singular compared to traditional yield-type funds. The introduction of the staking mechanism can not only bring additional sources of yield but also provide ETFs with a closer linkage to the blockchain ecosystem, potentially attracting a broader investor base, especially those institutional investors who focus on balancing "yield + asset allocation."
On a deeper level, opening ETF staking is also an important step for Hong Kong in building a closed-loop Web3 financial ecosystem. Since establishing the VASP licensing mechanism and allowing retail investors to participate in trading, the compliance framework of Hong Kong's virtual asset market has gradually taken shape. However, to move towards a truly deep and resilient Web3 ecosystem, it is far from enough to rely solely on asset issuance and trading; simultaneous advancement is still needed in on-chain operational capabilities, yield models, and compliance assurance systems. The introduction of the on-chain staking mechanism is the first attempt to incorporate DeFi's native functions into traditional finance, establishing a systematic and sustainable revenue linkage bridge between on-chain finance and traditional capital markets.
Moreover, in the context of global regulatory competition, Hong Kong's policy implementation has a forward-looking demonstrative effect. The United States has yet to approve any staking-type ETFs, with major controversies centered around asset ownership, potential securities attributes, and risk control issues. In contrast, Hong Kong has explored a feasible prudent regulatory model through measures such as custodial isolation, ratio limits, and risk disclosure, providing a strong reference for other jurisdictions.
In the future, whether the United States approves the staking function for Ethereum ETFs may again have a significant impact on the design of global virtual asset products. As institutions like Coinbase and Grayscale continue to push for policy communication, the SEC's attitude towards staking mechanisms may show marginal loosening. According to recent disclosures from foreign media, some pilot applications for staking functions have entered the final evaluation stage. If the United States ultimately approves, it will trigger renewed global market attention on "staking-type ETF" related products and create competitive pressure on Hong Kong's existing product structure. However, before that, Hong Kong, with its speed of policy implementation and clarity of systems, is expected to attract more international capital focused on "on-chain yields" to flow into the Asia-Pacific market, further solidifying its leading advantage in the global virtual asset and digital financial innovation landscape.
It is foreseeable that as more ETF managers submit staking plans and more trading platforms launch compliant staking services in the future, Hong Kong will build a virtual asset financial product system with richer yields, more reasonable structures, and more complete regulations, promoting virtual assets from "tradable" to "configurable" and "appreciable" new stages, to meet the diverse needs of investors and support the continuous development of Hong Kong's virtual asset ecosystem.
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