Hong Kong allows crypto staking for licensed platforms, ETFs as global competition heats up

Hong Kong's top financial regulator now allows licensed crypto platforms and exchange-traded funds to offer staking services — marking a step closer to the region's ambition of becoming a cryptocurrency hub.

In a statement released Monday, the Hong Kong Securities and Futures Commission said it provided regulatory guidance about staking for licensed "virtual asset trading platforms" (VATPs) and for crypto ETFs . "We have noted investors’ demand for staking services, and the potential for staking activities to contribute to the security of the blockchain network," the SFC said.

The SFC stipulates that VATPs must obtain the regulator's prior written approval before offering staking services, and crypto ETFs are also required to seek approval to engage in staking. Specifically, crypto firms are required to implement safeguards to prevent service-related errors, protect clients' staked crypto assets and clearly disclose associated risks.

The financial watchdog's staking guideline is part of the Hong Kong government's roadmap , announced in February, to develop the region's crypto framework. The roadmap outlines 12 initiatives, including exploring the possibility of new token listings, margin trading, derivatives, staking, borrowing and lending.

Hong Kong has opened its door to the crypto industry. In June 2023, it officially launched a crypto licensing regime for “virtual asset trading platforms,” allowing licensed exchanges to offer retail trading services. However, with the goal of becoming a crypto hub, the regulator is now seeking to accelerate crypto development, especially amid intensifying competition due to the pro-crypto stance of Donald Trump, who recently took office in the U.S.

"Broadening the suite of regulated services and products is crucial to sustaining the healthy advancement of Hong Kong’s virtual asset ecosystem," Julia Leung, chief executive officer of the SFC, said in Monday's statement. "But the broadening must be done in a regulated environment where the safety of client virtual assets continues to be front and center of the compliance framework for offering such service."