Hong Kong SFC Issues New Guidelines for Crypto Staking Services
1min read The Securities and Futures Commission (SFC) of Hong Kong has introduced new guidelines for crypto exchanges offering staking services. The announcement, made on April 7, follows recent remarks from Christina Choi, the SFC’s executive director of investment products, who emphasized the regulator's commitment to supporting the region's Web3 journey during a speech at the Hong Kong Web3 Festival.
Ask Aime: How will the new SFC guidelines for crypto exchanges offering staking services impact the regional Web3 industry?
The SFC recognizes the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields. The latest guidance permits crypto exchanges to provide staking service offerings, provided they obtain written approval from the SFC, retain control over staked virtual assets, and do not delegate custody to third parties. Additionally, exchanges must disclose all relevant risks and details concerning fees, minimum lock-up periods, unstaking processes, outage processes, and custodial arrangements to their customers. Providers are also required to report on their staking activities to the SFC.
A similar circular was sent to SFC-regulated crypto fund operators, with the new rules being relevant to funds with more than 10% of their net asset value invested directly or indirectly in digital assets. Funds can only acquire virtual assets that are also directly available to the local public and rely on SFC-authorized platforms. Leveraged exposure is prohibited. Funds can engage in staking if it is consistent with the fund’s objectives, while providing clear disclosure and robust controls. An investor notice and possibly shareholder approval may be required if staking implementation leads to material strategy or risk profile changes.
During her recent speech, SFC’s Choi acknowledged that the Web3 space is still evolving and that its full benefits will unfold over time. She cited the speculative industry of non-fungible tokens (NFTs) as a cautionary tale that justifies a cautious regulatory approach. Choi emphasized the importance of strengthening the fundamentals and fostering a supportive ecosystem where Web3 can thrive sustainably. She highlighted that Hong Kong ranks third in the Global Financial Centres Index and provides clear guidelines for crypto industry firms, making it an attractive location for Web3 companies.
Choi also pointed out that Hong Kong's financial technology sector has seen significant growth since 2022. The SFC recently introduced a new roadmap, "ASPIRe," to position the city as a global cryptocurrency hub. The roadmap involves 12 initiatives spread across five broad categories, including providing market access, optimizing compliance and frameworks, and improving blockchain efficiency. This initiative aims to future-proof the local virtual asset ecosystem and drive promising outcomes for the region's financial markets.
