SFC Unveils New Crypto Staking Framework for Licensed Platforms
The Securities and Futures Commission (SFC) of Hong Kong has introduced new regulatory guidance that allows licensed Virtual Asset Trading Platforms (VATPs) and exchange-traded funds (ETFs) to provide staking services, according to an official statement released on April 7. The decision reflects the SFC’s growing effort to support innovation in crypto finance while maintaining rigorous investor protection, especially in systems that rely on Proof-Of-Stake (PoS) blockchains like Ethereum.
“Client asset safety must remain at the core of any new crypto service,” said SFC CEO Julia Leung, noting the commission's focus on both transparency and operational safeguards.
What the New VATP Staking Rules Require
To operate staking services, VATPs must comply with several strict internal control measures, including:
- Full in-house custody of staked assets (no third-party custodians allowed).
- Comprehensive risk management protocols.
- Transparent client asset handling.
- Procedures to resolve conflicts of interest.
If VATPs choose to outsource any part of the staking process, they must:
- Perform extensive due diligence.
- Obtain prior approval from the SFC.
Platforms are also required to clearly disclose details to users, such as:
- Supported assets.
- Lock-up periods and unstaking conditions.
- Fees, rewards, and associated risks.
- Service terms and contractual obligations.
ETFs Can Stake Under Conditions
For crypto ETFs, staking will be permitted only through licensed VATPs or authorized institutions (AIs)—and only if it aligns with the fund’s original investment objectives.
Additional ETF-specific rules include:
- Clear disclosures on the proportion of assets staked.
- Detailed explanation of returns, fees, and risks.
- Advance investor notifications if staking changes a fund’s risk profile.
- Potential requirement for shareholder approval if strategy shifts materially.
The move opens the door for regulated yield-generating products in Hong Kong while keeping asset transparency and client protection at the forefront.
