Huaxia to add staking to Ether ETF, Hong Kong’s second of its kind

Huaxia Fund is set to launch staking services on its Ether exchange-traded fund (ETF), making it the second in Hong Kong. OSL Digital Services (OSL) will provide custody and staking infrastructure for the fund.

The staking feature will be live on May 15, moving the ETF from a strictly passive investment vehicle to an “active participant” in the Ethereum ecosystem, according to the announcement from OSL. Huaxia Fund, a subsidiary of China Asset Management (ChinaAMC), first launched its Ether ETF in April 2024. 

The introduction of a staking provision comes after Hong Kong’s Securities and Futures Commission (SFC) changed its rules on April 7 to allow for entities like centralized exchanges to offer crypto staking in a bid to position the city as a leader in Web3. 

When announcing the rule change, the SFC said it “recognizes the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields.”

Related: Hong Kong Bitcoin, Ether ETFs attract over $200M on day 1

Staking is the process of locking up crypto tokens to help support the operations and security of a blockchain network. In return, participants earn rewards, typically in the form of more cryptocurrency.

On April 10, Bosera HashKey was approved to be a staking provider in Hong Kong, the first under the new rule. According to a press release, staking will allow for Bosera HaskKey’s Ether ETF to take advantage of compound growth, as yield from the staked Ether can be reinvested into the financial instrument.

According to Coinbase, ETH stakers are currently earning about 2.14% of their holdings in a 365-day average.

30-day ETH staking yield as of April 13. Source: Dune Analytics

Hong Kong changes rules to become Web3 hub

Staking for Ether ETFs has been a central topic in the United States. In December 2024, Bernstein Research predicted that staking would be approved for Ether ETFs under the crypto-friendly Trump administration. Since then, CBOE and the NYSE have filed for a rule change with the United States Securities and Exchange Commission (SEC) to grant permission for staking in such funds.

Asset manager BlackRock has remarked that while successful, ETH ETFs are less perfect without staking. Staking is seen as a way to attract more investors to the Ether ETFs, who may be lured by the possibility of yield, which leads to further gains.

Related: Ether shoots up 3.5% as CBOE, 21Shares seek to add ETH staking to ETF

Hong Kong’s SFC appears to understand that and is acting accordingly. Chen Wu, the CEO of Hong Kong-based crypto exchange Ex.io, told Cointelegraph. “The SFC’s announcement signals that more doors are opening — not just for staking, but for a wider range of Web3 products to take shape under a regulated and trusted framework,” she said.

Hong Kong has seen a 250% growth in its blockchain sector since 2022, with the city’s fintech market expected to reach over $600 billion by 2032. The Hong Kong government is considered to have proactive policies for cryptocurrency companies, a stark contrast to the sometimes combative tone other governments take to the emerging asset class.

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