On April 7, 2025, the Securities and Futures Commission (SFC) of Hong Kong published a circular outlining clear requirements for Virtual Asset Trading Platforms (VATPs) that offer staking services, recognizing the growing investor demand and importance of staking in supporting blockchain security.
VATPs in Hong Kong may now provide staking services if they fulfill the SFC’s standards and obtain prior SFC approval. This opens the door for regulated staking offerings that include exchange-based services, fund products, OTC deals, and ETFs for assets like ETH and SOL.
Blockdaemon As A Trusted Partner To VATPs In Hong Kong
Blockdaemon is well-positioned in-market to help VATPs launch staking services. Our reliable infrastructure and deep regulatory expertise enables clients to protect customer assets, disclose key information, and manage risks without compromising performance.
Below are three key advantages Blockdaemon can bring to clients’ operations.
1. Non-Custodial, SFC-Compliant Staking Solutions
Blockdaemon enables clients to maintain full control over their customers’ virtual assets, complying with the Securities and Futures Commission’s (SFC) directive prohibiting third-party custody. Our solutions provide clients with full management of withdrawal processes, including control over private keys and pre-signed voluntary exit messages, ensuring compliance and the secure handling of client assets.
- Custom Deployment and 24/7 Support
Blockdaemon provides flexible, customized deployment options, supporting both white-label and public validators to adapt to clients' infrastructure, such as retail exchanges or institutional desks. Our 24/7 monitoring and real-time support helps clients respond to network events and remain accountable to regulators and end-users.
- OFAC Compliance and MEV Relay Integration
We provide flexibility to integrate either OFAC-compliant or non-compliant MEV relays into client staking operations, aligning with clients’ regulatory and operational requirements. OFAC-compliant relays block transactions involving sanctioned addresses, ensuring adherence with specific legal frameworks. Conversely, other providers may choose to only offer non-compliant relays in search for higher yields and do not impose such restrictions.
2. Transparency in Fees, Risks, and Reward Calculations
- Clear Fee and Risk Disclosures
At Blockdaemon, we ensure compliance with the Securities and Futures Commission's (SFC) mandates by providing clear disclosures on fees, protocol staking rules, and potential slashing events. Our Staking Reporting API enhances transparency by offering detailed insights into staking operations, including validator status, rewards, and performance across multiple blockchain networks. This enables clients to effectively communicate with customers and regulators.
- Protocol Reward Rate (PRR) Tracking
Over the last six months, our average PRR for ETH staking has consistently outperformed the network. In March, Blockdaemon delivered an Ethereum PRR of 3.35%, compared to the network average of 3.26%. While past performance does not guarantee future results, it demonstrates our commitment to optimizing rewards.
- Higher Rewards Without Extra Risk
Our approach optimizes compliance, security, and reward consistency. By combining industry-leading validator infrastructure with ongoing protocol analysis, we aim to maximize rewards while mitigating risks.
3. Robust Risk Management and Internal Monitoring
We uphold our contractual guarantee to reimburse 100% of any slashing penalties resulting from double-signing or other protocol violations. To date, we have recorded zero slashing events.
- Strong Uptime and Monitoring
We maintain 100% machine uptime and 99.9% protocol uptime, ensuring clients’ validators remain secure and online. Our robust internal controls minimize errors and downtime.
- Real-Time Risk Assessment
We consistently evaluate network conditions, validator performance, and protocol changes. We manage any adjustments, ensuring clients meet the SFC’s standards for safeguarding client assets.
Contact the Blockdaemon team today to discuss how we can help you meet the SFC’s staking requirements and ensure smooth regulatory approval. Book a call with the Blockdaemon team today.
