The Impact of Hong Kong Launching Ethereum ETF Staking Services on the Crypto Market

Introduction

On April 7, 2025, during the Hong Kong Web3 Carnival, the Hong Kong Securities and Futures Commission issued a circular regarding virtual asset trading platforms providing stake services. The regulatory agency acknowledged the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn returns.

After the announcement of the circular, Huaxia Fund and Bosera Fund, which have issued Ethereum spot ETFs, 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, Huaxia Fund announced the launch of staking services for its Ethereum ETF, becoming the second fund in Hong Kong to offer such services.

Staking is an important feature of PoS public chains. Investors can stake their PoS public chain tokens to nodes or liquidity platforms to earn rewards similar to mining in PoW networks. This not only brings passive appreciation but also allows for active income.

In contrast, Bitcoin ETFs cannot provide staking services due to the PoW mechanism. Custodians do not have the authority to lend out client assets, and investors cannot earn additional returns through staking.

The Hong Kong Securities and Futures Commission approved Ethereum ETF staking services earlier than the United States, which is a milestone for Hong Kong in building an Asian Web3 hub. It reflects the regulatory body's in-depth research on on-chain yield mechanisms, as well as the government's open-minded attitude towards the crypto industry. For traditional investors, the actual returns that ETF staking services may bring are more worthy of attention. The following text will analyze ETH staking yields and their impact on Hong Kong's Web3 industry.

1. ETH stake收益分析

1.1 ETH stake mechanism and on-chain earnings

Ethereum staking requires 32 ETH to become a validator node. In addition to block rewards, nodes can also earn MEV income and transaction fees. Ordinary holders can indirectly participate in profit sharing through staking service providers.

stake yield = ( block rewards + MEV + tips ) / 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. The APY in May 2025 is 3.07%, which is not considered high yield for a financial product.

The yield volatility is mainly influenced by MEV and tips. Taking the example of the PEPE coin frenzy in May 2023, the ETH staking APY once surged to 10.66%, with MEV and tip income reaching 3.54% and 3.31%, respectively.

It is important to note that MEV and tip income are only related to block-producing nodes. The staking rewards of future ETF products will depend on the operational status of the partner exchange nodes.

1.2 ETH vs SOL stake收益率对比

Compared to ETH, the staking yield of SOL is more attractive. In May 2025, the staking APY on the SOL chain reached 8.70%, which is 5 percentage points higher than ETH. This has also led to a SOL staking rate of (67.97%), far exceeding ETH's (28.56%).

An important reason for the decline in ETH stake yields is the EIP-1559 proposal. This proposal aims to reduce the ETH inflation rate by directly burning the base Gas fee, with nodes receiving only tip income. In contrast, Solana takes a middle ground, distributing 50% of the base fees to nodes.

Overall, the ETH ETF staking service provides traditional investors with approximately 3% additional dividends, without the need for complex on-chain operations, marking a milestone financial service advancement in the transition from Web2 to Web3.

2. The Long Tail Effect of Hong Kong ETH ETF Staking Policy

Hong Kong is one step ahead in the Ethereum ETF, having approved its establishment in April 2024, with products quickly launched. In contrast, the United States did not pass the Ethereum ETF until May 2024, and the products officially went live at the end of July.

However, the liquidity advantage of the US market remains significant. By the end of 2024, the largest Ethereum ETF in the US reached a scale of $3.584 billion, while the three ETFs in Hong Kong totaled only $63.46 million, about 1% of that in the US.

In theory, the Hong Kong ETF gains Gas revenue through staking services, making it more attractive to investors. However, in practice, there has not been a noticeable increase in the Hong Kong ETF after the launch of the staking service, and there has not been a significant outflow from the US ETF either.

This phenomenon can be explained from the following perspectives:

1. The liquidity of the Hong Kong market is not as abundant as that of the United States.
2. It is difficult for American investors to complete the registration of Hong Kong securities accounts in the short term.
3. Traditional investors still have a cognitive barrier to the concept of "stake".

Overall, Hong Kong's approval of ETF staking is a long-tail favorable policy that is unlikely to significantly increase scale in the short term. However, as market education deepens and infrastructure improves, the long-term effects are expected to gradually become apparent.

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

Another important reason for the approval of the Ethereum ETF is its advantageous position in the RWA asset field. As of May 2025, the total value of RWA assets on the Ethereum network exceeds $7 billion, and the stablecoin assets exceed $120 billion, both ranking first among public chains.

Hong Kong is deeply involved in the RWA field. The Ensemble sandbox project will be launched in August 2024, and multiple tokenization projects for physical assets have been completed. In February 2025, Huaxia Fund will launch the first retail tokenized fund in the Asia-Pacific region, with the underlying asset being short-term deposits in Hong Kong dollars.

The implementation of staking services may have more far-reaching significance, representing that Hong Kong will participate more in the governance of the Ethereum network to support the RWA track that is a development focus. Major nodes of ETH have significant influence in ecological governance, and Hong Kong can enhance its influence in the Ethereum community through staking services, thereby promoting the development of a compliant RWA ecological system.

4. Conclusion

Hong Kong's policy breakthroughs in the Ethereum ecosystem and its layout in RWA have laid a foundation for future development. The ETF staking service not only strengthens Hong Kong's position as a Web3 innovation hub in Asia but also highlights its strategic foresight in the RWA field. With the advantages of RWA assets, the Ethereum network has become a key bridge connecting traditional finance and the crypto world.

With more tokenization projects of physical assets being implemented, Hong Kong is attracting RWA projects to take root. In the future, Hong Kong is expected to become an important hub for the issuance, trading, and compliance of RWA assets in Asia, fostering innovative practices between the real economy and blockchain technology.