What does the Hong Kong Securities and Futures Commission's launch of Ethereum Spot ETF staking services mean for the crypto market?

On April 7, 2025, during the Hong Kong Web3 Carnival, the Hong Kong Securities and Futures Commission issued a circular regarding the provision of staking services by virtual asset trading platforms. The regulatory body stated that it "recognizes the potential benefits of staking in enhancing the security of blockchain networks, as well as the possibility of allowing investors to earn returns."

After the circular was released, Hua Xia Fund and Bosera Fund, which had issued the Ethereum Spot ETF, responded quickly. On April 11, Bosera Fund announced that its Ethereum ETF was approved to stake up to 30% of its Ethereum holdings starting from April 25. On April 18, Hua Xia Fund also announced that it would launch staking services for its Ethereum ETF.

Staking is the main difference between PoS public chains and PoW public chains. Investors can stake their PoS public chain governance tokens to nodes or liquidity staking platforms to earn network yield distributions. This not only brings passive appreciation of tokens but also generates active income.

In contrast, several public funds in Hong Kong have launched Bitcoin ETF products that cannot provide staking services, as PoW public chains do not have a staking mechanism designed. Bitcoin ETF funds, as custodians, also do not have the authority to lend out client assets, therefore investors cannot earn additional returns through staking.

The Hong Kong Securities and Futures Commission approved Ethereum ETF staking services earlier than the US SEC, marking a milestone for Hong Kong to become the Web3 center of Asia. This not only reflects the in-depth research of Hong Kong regulators on on-chain revenue distribution mechanisms but also showcases the Hong Kong government's open attitude towards the crypto industry. For traditional financial investors, the most concerned issue may be how much actual return ETF staking can bring. Below, we will analyze ETH staking returns and their impact on Hong Kong's Web3 industry.

1. ETH stake yield analysis

The Ethereum ETFs of Huaxia Fund and Bosera Fund are provided by staking nodes from OSL Exchange and Hashkey Exchange, respectively. Since the specific amounts allocated to investors have not yet been disclosed, we can refer to the on-chain ETH staking returns.

1.1 Ether staking mechanism and on-chain收益

The Ethereum public chain is composed of distributed nodes, and 32 ETH must be staked to the official contract to become a qualified node. In addition to receiving block rewards, nodes can also earn MEV income and transaction tips. If ETH holders do not have enough funds to operate a node, they can indirectly earn node revenue sharing through staking service providers.

Stake yield = ( block rewards + MEV fees + Tips fees ) / total value of staked Ether

According to statistics, the ETH stake APY remained stable at over 5% during the bear market in November 2022, while it was only around 3.3% during the bull market in December 2024. In May 2025, the ETH stake APY was 3.07%, which is not considered a high-yield product from an investment perspective.

The change in yield is mainly influenced by MEV and Tips income. For example, on May 9, 2023, the staking APY reached 10.66%, with a block reward yield of 3.81%, MEV income of 3.54%, and Tips income of 3.31%. This is related to the surge in trading volume of the PEPE token, as investors paid high fees to get ahead in trades, and nodes also obtained maximum value by manipulating transaction ordering.

It is important to note that MEV and Tips income is only related to the block producing nodes and is not evenly distributed. Therefore, the staking rewards of Huaxia and Bosera ETFs will be closely related to the operation of OSL and Hashkey nodes.

1.2 ETH vs. SOL stake yield comparison

Compared to other public chains, the staking yield of ETH is not very competitive. In May 2025, the staking yield on the SOL chain was 8.70%, much higher than ETH's 3.07%. This also led to SOL's staking rate (67.97%) being much higher than ETH's (28.56%).

One important reason for the continuous decline in ETH staking yields is the EIP-1559 proposal. The proposal aims to reduce the inflation rate of Ether and optimize the economic model. After the proposal was passed, the base Gas fees were burned, and nodes only received Tips fees, resulting in a significant decrease in income.

In contrast, Solana takes a middle path, burning 50% of the base fee and rewarding the remaining 50% of the base fee and Tips fee to the nodes. As a result, SOL stakers gain an additional share of the base Gas fee. With Solana's on-chain transaction fees expected to surpass Ethereum in the first quarter of 2025, SOL staking rewards are further enhanced.

Nevertheless, for traditional financial investors, the ETH ETF staking service enhances returns without increasing operational thresholds, marking a milestone progress in the transition from Web2 to Web3. Investors can view the staking service as an additional approximately 3% dividend on top of their token assets.

2. The Hong Kong Ethereum ETF staking is a long-tail favorable policy

Comparing Hong Kong and the United States, the U.S. was the first to approve a Bitcoin ETF in January 2024, but Hong Kong took the lead in Ethereum ETFs. On April 15, 2024, Hong Kong approved the establishment of an Ethereum ETF, which quickly launched on April 30. The U.S. approved the Ethereum ETF in May, with the product going live at the end of July.

However, the United States still has an unmatched advantage in liquidity. By the end of 2024, BlackRock iShares Ethereum ETF reached a size of $3.584 billion. In contrast, the total size of three Ethereum ETFs in Hong Kong was only $63.46 million, approximately 1% of the size in the United States.

In theory, Hong Kong ETFs gain gas fee shares through staking services, which have significant advantages over US ETFs. However, in practice, after the launch of staking services, there has not been a noticeable increase in subscriptions for Hong Kong ETFs. During the price increase of ETH in May, there was only a slight net inflow for Hong Kong ETFs. US ETFs not only did not experience large-scale redemptions but also showed net inflows in April.

This phenomenon can be explained from the following perspectives:

1. The Hong Kong market lacks liquidity, and even if staking services are launched, it will be difficult to attract substantial funds.
2. It is difficult for American investors to complete the registration of Hong Kong securities accounts in the short term.
3. Traditional financial investors still have a cognitive barrier to the concept of "stake".

Hong Kong's approval of ETF stake services is a long-tail positive policy, which is difficult to significantly increase scale in the short term. As market education deepens and infrastructure improves, the long-tail effect of this policy is expected to gradually emerge in the future.

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

Hong Kong's leadership in Ethereum ETFs and staking services reflects its emphasis on RWA( tokenization of physical assets ). Ethereum is currently the public chain with the highest total value of RWA assets, with on-chain RWA assets exceeding $7 billion and stablecoin assets exceeding $120 billion as of May 2025, both ranking first among public chains.

In August 2024, the Hong Kong Monetary Authority launched the Ensemble sandbox project to promote tokenization applications. As of May 2025, multiple RWA projects have been completed, including charging stations and photovoltaic power plants. China Asset Management also launched the first retail tokenized fund in the Asia-Pacific region, with the underlying assets being Hong Kong dollar short-term deposits, issued on the Ethereum chain.

Hong Kong has launched ETF staking services, which may mean more participation in Ethereum network governance to develop RWA as a key track. Major nodes in the ETH ecosystem have significant say in governance, and through staking services, Hong Kong not only enhances user returns but also increases its influence in the Ethereum community, thereby promoting the compliant development of the RWA ecosystem.

4. Conclusion

Hong Kong's policy breakthroughs in the Ethereum ecosystem and its layout in the RWA track have laid a foundation for future development. By approving ETF stake services, Hong Kong has strengthened its position as an Asian Web3 innovation hub and demonstrated strategic foresight in the RWA field. The Ethereum network, with its RWA asset advantages, has become a bridge connecting traditional finance and the crypto world.

As more tokenization projects for real-world assets are implemented, Hong Kong is attracting RWA projects with policy dividends and technical compatibility. In the future, with the enhancement of governance discourse power in Ethereum and the 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.