Hong Kong Advances Important Milestone in the Compliance of Virtual Asset Financial Products

Recently, the Hong Kong Securities and Futures Commission issued a circular allowing virtual asset spot ETFs to participate in on-chain staking activities under a regulatory framework, and relaxed relevant restrictions on virtual asset trading platforms, allowing licensed platforms to provide staking services to customers. This initiative is another key step in Hong Kong's exploration of a compliant Web3 financial system, which not only enhances the attractiveness of Hong Kong's virtual asset ecosystem but also combines traditional financial products with the native mechanisms of the on-chain economy for the first time, providing a demonstration for global virtual asset regulation and financial innovation.

The Introduction of Staking Mechanisms into Traditional Financial Systems

Staking 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 operation but also serves as the main channel for obtaining on-chain yields. Data shows that as of early April 2025, over 34 million ETH have been staked on the Ethereum network, accounting for 28.03% of the total supply; other projects such as Cardano and Solana have also maintained a staking rate of over 70% for a long time.

Hong Kong allows virtual asset spot ETFs to participate in on-chain staking, indicating that regulators recognize staking as a core mechanism for obtaining network incentives within the public chain ecosystem, and that their understanding of the technology and risk management capabilities related to virtual assets and the Web3 ecosystem are increasingly mature. To ensure that risks are controllable, the circular outlines a series of measures, including operating and custodian staking assets through licensed trading platforms and authorized institutions, setting a cap on the staking ratio, and requiring comprehensive disclosure of related information.

At the same time, the Securities Regulatory Commission revised the previous restrictions on trading platforms, allowing licensed platforms to provide pledge services to customers. This not only expands the service boundaries of trading platforms but also provides a reliable compliance execution environment for spot ETF participation in pledging.

For spot ETFs of virtual assets, the introduction of staking will significantly enhance the product's attractiveness and scale. The additional annual yield of 3%-6% brought by staking is expected to attract institutional investors, family offices, and other medium to long-term funds. It is anticipated that the management scale of Hong Kong's virtual asset spot ETFs may achieve structural growth within the next 6 to 12 months.

Building a Bridge for Yield Linkage between Traditional Finance and On-chain Economy

The release of the staking service in Hong Kong reflects a deep consideration of institutional design. Firstly, it strengthens and optimizes the operational mechanism of the local ETF market. The introduction of the staking mechanism not only brings additional sources of income but also provides a closer connection between ETFs and the blockchain ecosystem, which is expected to attract a wider range of investors.

Secondly, this is an important step for Hong Kong in building a Web3 financial ecosystem closed loop. Introducing on-chain staking mechanisms incorporates DeFi native functions into traditional finance, establishing an institutionalized and sustainable yield linkage bridge between on-chain finance and traditional capital markets.

In addition, against the backdrop of global regulatory competition, the implementation of policies in Hong Kong has a forward-looking demonstration effect. Through measures such as custodial isolation, proportional limits, and risk disclosure, Hong Kong has explored a feasible prudential regulatory model, providing a strong reference for other jurisdictions.

In the future, as more ETF managers submit staking plans and more trading platforms launch compliance staking services, Hong Kong will establish a virtual asset financial product system that is richer in returns, more structured, and more complete in its regulations. This will propel virtual assets from a "tradable" phase to a new stage of "configurable" and "value-added," meeting the diverse needs of investors and supporting the continuous development of Hong Kong's virtual asset ecosystem.