Reports suggest that Hong Kong's Securities and Futures Commission (SFC) is exploring the possibility of allowing staking of ether held in spot Ethereum ETFs within the region, potentially introducing a new avenue for passive income for investors.

According to sources familiar with the matter cited by Bloomberg, the SFC has engaged in discussions with crypto ETF firms in Hong Kong regarding the provision of staking services via licensed platforms. If approved, these ETF issuers plan to stake ether held in their funds, offering investors an opportunity to earn yields in addition to potential capital appreciation.

While Asia's first spot bitcoin and ether ETFs made their debut on the Hong Kong Stock Exchange at the end of April, they have so far failed to generate significant interest. In contrast, U.S. spot Bitcoin ETFs witnessed substantial inflows, highlighting the disparity in demand between the two regions.

Although talks regarding staking are ongoing, there is currently no clear timeline for a decision. The potential approval of staking in Hong Kong's spot Ethereum ETFs could not only provide investors with additional income streams but also align with the city's aspirations to establish itself as a global crypto hub.

However, whether staking capabilities will effectively address the lackluster demand for ETFs in the region remains uncertain. In the U.S., meanwhile, issuers have been removing staking features from their spot Ethereum ETF applications, potentially to enhance their chances of approval.

This shift comes amidst regulatory concerns, with the SEC reportedly expressing reservations about staking cryptocurrencies. Recent actions by issuers, such as removing staking components from ETF applications, suggest a strategic response to regulatory considerations.

The SEC is set to make final decisions on spot Ethereum ETF applications from various issuers, including VanEck and Ark Invest, in the coming days. The outcome of these decisions could significantly impact the trajectory of the crypto ETF landscape in both the U.S. and Hong Kong, shaping investor opportunities and regulatory dynamics moving forward.