Hong Kong Securities and Futures Commission Launches Ethereum Spot ETF Staking Services: Impact on the Crypto Market

Preface

On April 7, 2025, during the Hong Kong Web3 Carnival, the Hong Kong Securities and Futures Commission issued a circular on "Providing Stake Services by Virtual Asset Trading Platforms." The regulatory agency stated that it "recognizes the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn returns."

After the circular was released, Huaxia Fund and Bosera Fund, which have issued Ethereum Spot ETFs, responded quickly. On April 11, Bosera Fund announced that its Ethereum ETF was approved to stake up to 30% of its Ether holdings starting from April 25. On April 18, Huaxia Fund also announced the launch of staking services for its Ethereum ETF, becoming the second fund in Hong Kong to provide such services.

Staking is the main feature that distinguishes PoS public chains from PoW public chains. Investors can stake the PoS public chain tokens they hold to nodes or liquidity staking platforms to earn distribution of network node rewards. This not only brings passive appreciation but also generates active income.

In contrast, although several public funds in Hong Kong have also launched Bitcoin ETFs, PoW public chains do not have a staking mechanism. The so-called BTC staking on-chain is actually a lending service after bridging to EVM public chains. As a custodian, Bitcoin ETF funds have no right to lend out customer assets, so investors cannot obtain active returns through staking.

The Hong Kong Securities and Futures Commission approved the Ethereum Spot ETF staking service earlier than the United States, marking a milestone for Hong Kong, which aims to become the Asian Web3 center. This not only reflects the in-depth research of Hong Kong regulators on on-chain income distribution mechanisms but also demonstrates the proactive and open-minded approach of the Hong Kong government towards crypto industry policies. For traditional financial investors, the actual returns that ETF staking services can bring may be of greater concern. The following text will analyze the returns of ETH staking and its impact on Hong Kong's Web3 industry.

1. ETH stake yield analysis

Hua Xia Fund and Bosera Fund's Ethereum ETF launched staking services in April, with nodes provided by OSL and Hashkey exchanges, respectively. As the specific amounts allocated to investors have not been disclosed, this article will provide a reference for investors based on on-chain ETH staking yields.

1.1 Ether stake mechanism and on-chain returns

The staking mechanism of the Ethereum public chain can be summarized as follows: the public chain is composed of server nodes distributed globally, providing a network for on-chain address transactions. When confirming transactions, traders need to pay Gas fees to the nodes. To become a qualified node, in addition to hardware equipment, one must stake 32 ETH to the official contract. Besides block rewards, nodes can also earn MEV income and front-running transaction tips. ETH holders who lack sufficient funds to operate a node can indirectly obtain a share of node profits through staking service providers like Lido.

The ETH staking yield is determined by the following formula: Stake yield = (Block rewards + MEV fees + Tips fees) / Total value of staked ETH

According to data statistics, in November 2022 during the bear market, the ETH stake APY remained stable at over 5%, which is a peak in recent years. In December 2024 during the bull market phase, the APY was only about 3.3%. In May 2025, the ETH stake APY was 3.07%, which from a financial product perspective is not a high-yield product.

Factors affecting changes in staking yield include: After EIP-1599, block reward income is relatively stable. The spike in APY is mainly due to a short-term surge in MEV income and Tips income. For example, on May 9, 2023, the APY rose to 10.66%, with a block reward yield of 3.81%, MEV income of 3.54%, and Tips income of 3.31%.

In early May 2023, the Memecoin project PEPE saw a surge in trading volume, with its market capitalization increasing by 70 times in a short period. Under FOMO sentiment, a large number of addresses bought and sold PEPE, with some users paying high tips to get ahead in trading. At the same time, nodes maximize on-chain value through transaction ordering and other methods.

Once the tokens that have a significant wealth effect in the short term trigger on-chain traffic, the Tips and MEV income obtained by the nodes will increase significantly. It should be noted that MEV and Tips income are only related to block-producing nodes and are not evenly distributed. In the future, the staking returns of Huaxia and Bosera ETF products will be closely related to the operation of OSL and Hashkey nodes.

Comparison of 1.2 ETH vs SOL stake yield

Compared to other public chains, the staking yield of ETH is not very competitive. As the main competitor of Ethereum, the staking yield on the SOL chain reached 8.70% in May 2025, which is 5 percentage points higher than ETH. This also makes SOL holders more inclined to stake. Currently, the staking rate on the SOL chain is ( total staked/total issued ) at 67.97%, while ETH is only 28.56%.

The continuous decline in ETH staking yields, far below that of SOL, is largely due to the EIP-1559 proposal. This proposal aims to reduce the inflation rate of ETH and optimize the economic model. Before the implementation of EIP-1559, nodes could earn the base transaction fee + Tips. After implementation, nodes only receive Tips, and the base Gas fee is burned to maintain the deflationary mechanism of ETH. This has resulted in a loss of significant income for nodes and stakers.

In contrast, Solana takes a middle route, with 50% of the base fees being burned and the remaining 50% rewarded to nodes as Tips. The SOL staking includes an additional share of the base Gas fees compared to ETH. Meanwhile, the Gas fees on the Solana chain have continued to rise, surpassing Ethereum for the first time in Q1 2025 to become the number one public chain in terms of Gas fees. Therefore, Solana nodes and stakers also benefit from the increase in Gas fees. Core teams of various public chains are all looking for a balance point between node rewards and deflationary mechanisms.

Overall, for traditional financial investors, on-chain staking of SOL requires complex operations such as registering a Web3 wallet and choosing a public chain. Ethereum ETF staking enhances returns without increasing investment thresholds, marking a milestone financial service advancement in the transition from Web2 to Web3. Traditional investors can view staking services as an additional dividend of about 3% based on token assets.

Some exchanges provide investors with convenient on-chain earning services. In the on-chain earning section of these platforms, investors can obtain excess returns without complicated operations. The staking yield for ETH is approximately 3%, while SOL can reach as high as 13%.

2. Hong Kong Ethereum Spot ETF staking is a long-tail positive policy

Comparing the attitudes towards cryptocurrency ETFs in Hong Kong and the United States, it is evident that the U.S. launched the Bitcoin ETF earlier and was the first in the world to introduce a cryptocurrency ETF, setting a demonstration effect. However, in terms of Ethereum ETFs, the Hong Kong Securities and Futures Commission acted more swiftly, approving the establishment on April 15, 2024, with three products quickly launching on April 30.

The approval of Ethereum Spot ETF in the United States has been slow. It took the SEC 4 months to approve the Bitcoin ETF, and only in May 2024 did they approve the Ethereum ETF, with BlackRock and Fidelity's products officially launching by the end of July. From the perspective of policy execution and implementation, Hong Kong has a first-mover advantage in Ethereum ETFs. However, as the global financial center, the liquidity advantage of the United States is unmatched. By the end of 2024, the scale of BlackRock iShares Ethereum Trust ETF reached $3.584 billion.

In contrast, the size of Hong Kong ETF funds is relatively small. By the end of 2024, the combined size of the Ether ETFs from Huaxia, Bosera, and Harvest is 63.46 million USD, approximately 1% of the total size of the Ethereum ETFs in the United States.

Starting from the logic of financial products, the Hong Kong Ethereum ETF gains Gas fee sharing through staking services, which has significant advantages over similar products in the United States. Rational users should redeem their holdings in the U.S. ETFs and instead subscribe to the Hong Kong ETF in pursuit of higher returns.

However, the actual situation is not the case. After the staking service was launched in April 2025, there was no significant increase in the subscriptions for the Ethereum ETF in Hong Kong. In May, the ETH price rose to $2,500, and the Hong Kong ETF saw net inflows of $610,000 and $700,000 on the 12th and 13th respectively. The U.S. ETF did not experience a large outflow, but instead saw a cumulative net inflow of $230 million from April 24-28, with an overall net inflow trend in April.

This phenomenon can be explained from three perspectives: first, the liquidity in the Hong Kong market is not as abundant as that in the United States, making it difficult to attract a large amount of capital even with the introduction of staking services. Second, it is difficult for U.S. ETF holders to complete the registration of Hong Kong securities accounts in the short term. Finally, the main clients of ETFs are traditional financial investors, who still face a barrier to understanding the concept of "staking." Although cryptocurrency has gained more recognition, traditional investors still need time for a deeper logical understanding.

Hong Kong's approval of virtual asset ETF stake services is a long-tail beneficial policy, but it is difficult to significantly increase scale in the short term. This is mainly limited by insufficient liquidity in the Hong Kong market, the difficulty for international investors to register, and traditional investors' limited understanding of "stake". As market education deepens and infrastructure improves, the long-tail effect of this policy is expected to gradually emerge.

3. The Prospects of the Ethereum Ecosystem in Hong Kong and the Development of RWA

Hong Kong is faster than the United States in the launch of the Ethereum ETF, and the staking yield of SOL is better than that of ETH. This raises the question of why we don't quickly launch a Solana ETF and provide staking services? This needs to be discussed from a macro perspective on the relationship between cryptocurrency and traditional finance. The core of Bitcoin ETF approval lies in its position as the main value measurement standard for cryptocurrency. The approval of the Ethereum ETF is partly due to ETH's long-term position as the second largest by market cap, and partly because the Ethereum network currently has the highest total value of RWA assets among public chains.

RWA is the anchor point for the collaboration between traditional finance and the crypto world, gradually becoming an independent narrative away from DeFi in 2024. As the financial center of Asia, the Hong Kong Monetary Authority launched the Ensemble sandbox project in August 2024 to promote tokenization applications. By May 2025, multiple RWA projects involving physical assets have been completed. Additionally, Huaxia Fund ( Hong Kong ) launched the first retail tokenized fund in the Asia-Pacific region in February 2025, with the underlying assets being HKD short-term deposits, and the tokens issued on the Ethereum chain.

Policy support and the rapid implementation of projects highlight Hong Kong's high level of attention to the RWA sector. As of May 2025, the total value of RWA assets on the Ethereum network exceeds $7 billion, and the total value of stablecoin assets exceeds $120 billion, both ranking first among public chains, forming a huge asset pool. The launch of staking services in Hong Kong may have greater aspirations and could represent Hong Kong's increased participation in the governance and construction of the Ethereum network to develop RWA, which is a key policy track.

ETH main nodes are regarded as important contributors to network security, holding significant influence over the governance and development direction of the Ethereum ecosystem. For example, in Q4 2024, DeSci will become an emerging narrative, with key proponents including Ethereum founder Vitalik and other industry leaders. Lido, holding a 26.3% stake in the Ethereum staking market, also has a strong community influence. Thus, it is evident that staking services not only enhance user returns but also increase Hong Kong's voice within the Ethereum community, thereby fostering a compliant RWA ecosystem.

Conclusion

Hong Kong's policy breakthroughs in the Ethereum ecosystem and deep layout in the RWA track lay an important foundation for the next stage of development. By approving Ethereum ETF stake services, Hong Kong not only strengthens its position as an Asian Web3 innovation hub but also demonstrates strategic foresight in the RWA field. The Ethereum network, with over $7 billion in RWA asset accumulation and advantages in stablecoin infrastructure, has become the core bridge connecting traditional finance and the crypto world. As the Hong Kong Monetary Authority promotes the landing of real asset tokenization projects and institutions issue on-chain HKD funds, Hong Kong is attracting more RWA projects to take root with policy dividends and technological compatibility. In the future, with the enhancement of Ethereum's governance discourse power and optimization of stake yield models, Hong Kong is expected to become a key node for the issuance, trading, and compliance of RWA assets in Asia, fostering more innovative practices between the real economy and blockchain technology.

![Hong Kong Securities and Futures Commission launches Ethereum Spot