Hong Kong Unveils New Regulations for Virtual Asset Staking Services
Hong Kong’s Securities and Futures Commission (SFC) has announced updated regulatory guidance allowing licensed Virtual Asset Trading Platforms (VATPs) and exchange-traded funds (ETFs) to offer staking services.
This move, outlined in an April 7 statement, aims to provide a clearer framework for blockchain networks using a proof-of-stake (PoS) system, such as Ethereum, which allows investors to earn yields by locking up tokens to validate transactions.
Staking Services: New Rules for VATPs
Under the new regulations, VATPs are required to implement stringent internal controls to minimize risks associated with staking. The SFC emphasized the importance of client asset safety, and as such, platforms will need to manage operational risks, resolve conflicts of interest, and ensure transparency.
A key aspect of the update is the requirement for VATPs to maintain control over all tools used to access or withdraw client assets. Third-party custodians are not permitted, but if any part of the staking process is outsourced, VATPs must conduct thorough due diligence and obtain prior approval from the SFC.
The new rules also include comprehensive disclosure requirements, ensuring that platforms inform clients about the supported assets, risks, lock-up periods, fees, and other important details before clients participate in staking.
Staking Services for ETFs
The SFC has also clarified that ETFs can offer staking services through licensed VATPs or authorized institutions (AIs). Fund managers will be required to meet strict conditions, such as ensuring that staking aligns with the fund’s objectives and managing the associated risks effectively.
Additionally, ETF fund documents must provide details about the proportion of virtual assets used for staking, expected returns, risks, and related expenses. If staking activities significantly alter a fund’s risk profile or investment strategy, managers must inform investors in advance and potentially seek shareholder approval.
Support for Innovation and Investor Protection
SFC CEO Julia Leung noted that the updated guidance reflects the regulator’s commitment to fostering innovation within the cryptocurrency sector while maintaining investor protection as a top priority. The SFC aims to strike a balance between promoting new financial services and ensuring that clients are well-informed and protected.
This regulatory development is expected to encourage further institutional and retail participation in the staking space while maintaining strict standards for risk management and transparency.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
