Hong Kong Ushers in the First ETH Staking Fund
Once one starts looking for new developments in a domain, like we have just done in “Asia Crypto: Is Hong Kong rising?”, one’s mind becomes sensitized to such domain, just as if using new key words in Google Search. While Tokyo hosted ETHGlobal and DAO Tokyo this week, Hong Kong had the Web3 festival going, so naturally, there was quite a bit of news. So here is another piece.
Pioneer Asset Management (“Pioneer”), a subsidiary of Tykhe Capital Group, announced to launch a new fund investing and staking in Web 3.0 proof-of-stake (PoS) blockchains such as Ethereum 2.0. This fund is the first staking fund in Hong Kong, aiming to provide investors an additional source of potential return from blockchain native staking rewards, apart from plain exposure to PoS cryptocurrencies.
Pioneer is an SFC-licensed digital-native asset manager helping investors access the ever-evolving digital economy to build their future. Pioneer has obtained licenses for Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated activities to be able to manage a portfolio comprising 100% of virtual assets.
The staking fund comes at a time of ongoing “crypto winter”. This February, crypto exchange Kraken agreed to shut down its staking program in the US and was fined USD 30m by the SEC, following a series of defaults and bankruptcies of lenders and deposit-taking platforms such as BlockFi and Celsius in 2022. It is foreseen that regulation and oversight of virtual asset activities will be tightened in the major jurisdictions. In Hong Kong, the Securities and Futures Commission (SFC) also urged investors to be wary of the potential high risks associated with VA “deposits”, “savings”, “earnings” or “staking” services (VA Arrangements). Yet the regulation focus is coming from an investor protection perspective, not challenging the investment in staking services.
According to the website of Ethereum organization, around 18 million of Ethereum have been staked on the Ethereum blockchain as at the end of March this year, which amounts to around USD 32bn of value (calculated with the conversion rate at the time.) Against the soaring demand, as the first virtual asset staking fund manager, Pioneer creates a new compliant avenue to tap the immense market potential of PoS staking in Hong Kong.
Hong Kong has just now completed a public consultation in March to discuss whether to allow retail access to licensed Virtual Asset trading platforms. A number of licensed brokers and fund managers are also currently providing virtual-asset related services to investors under the supervision of the SFC. The entry of financial institutions is gradually shaping the virtual asset space through the introduction of policies and procedures, systems and controls comparable to those in mainstream finance. It is opined that Hong Kong is just around the corner to become a top virtual asset hub.
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