ETFs
Ethereum Staking ETFs Coming to Hong Kong in Six Months – and the Financial Hub Won’t Stop There – DL News
- Hong Kong could launch Ethereum staking ETFs in the next six months.
- Other crypto products, such as a Uniswap ETF or a Chainlink ETF, could follow.
- The Bitcoin and Ethereum ETFs launched in April have been warmly welcomed by Hong Kong’s financial sector.
Ethereum staking exchange-traded funds are coming to Hong Kong — it’s just a matter of time.
That’s according to Vivien Wong, a partner at HashKey Capital, a crypto asset management firm that played a key role in launching Bitcoin and Ethereum spot ETFs in Hong Kong.
“As soon as Ethereum spot ETFs were approved in the US, people rushed to us asking, ‘Are you planning to launch an Ether staking product?’” Wong said. DL News.
She said regulators, such as the Hong Kong Securities and Futures Commission, were talking to the industry.
“Last month, I sent a message to regulators to say there was a need for Ether staking,” Wong said. “Without hesitation, they said, ‘OK, please send a detailed proposal.’”
The timing of his comments is remarkable.
Nine spot Ethereum ETFs are expected is expected to launch in the United States any day now, once the Securities and Exchange Commission finalizes the applications.
Ethereum ETF Staking
Ethereum is designed so that users can choose to lock up their Ether holdings and earn a 3% yield on the asset – a process called staking.
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While spot Ethereum ETFs allow investors to easily gain exposure to Ether through their brokerage accounts, they don’t allow them to earn that extra yield.
In fact, in Hong Kong, holders of these ETF shares have to pay management fees of between 0.3% and 0.99%, depending on the fund chosen.
“For a new Ethereum product to launch, it will probably take another six months or so,” Wong said.
Waiting for the continent
Hong Kong wants to offer products that don’t yet exist in the United States, as the government wants the city to become a fintech powerhouse, Wong said.
And the process is going “pretty well,” she said.
Existing crypto ETFs already attract two types of investors: people who simply want to “buy and hold,” and crypto natives, Wong said. Crypto natives, in particular, have been drawn to the ETF design.
According to Wong, the rapid process of creating and redeeming funds allows investors to use them for over-the-counter trading purposes.
But by taking the lead and offering advanced products, Hong Kong hopes to attract investors from other jurisdictions – and especially from the mainland.
“I hope that in the short to medium term, someone from China will provide support. [of the crypto ETFs]”We are waiting for this to open up this market,” she added.
A massive success
Hong Kong Crypto ETFs Have transported with nearly $260 million in assets since their launch in April, according to The block data.
Compared to spot Bitcoin ETFs in the US — which have raised $14.6 billion since January 11 — that may not seem like much.
But considering that Hong Kong’s ETF market is 168 times smaller than the U.S.’s, the products have been a huge success. “There’s definitely excitement,” Wong said.
Whether it is financial institutions, wealth managers, distributors or high net worth individuals, the entire Hong Kong market is slowly digesting the products and becoming more comfortable with them, she said.
It was not a guaranteed victory.
Opinion on cryptocurrencies has deteriorated in the region after some of the scandals of the last bear market, including the fraud case surrounding Hong Kong cryptocurrency exchange JPEX.
Uniswap ETF?
Wong said other cryptocurrencies may one day have their own ETFs, but neither choice is obvious, she said.
For Hong Kong regulators to approve new crypto ETFs, the underlying token must be publicly tradable through registered virtual asset trading platforms.
And it must be highly liquid, meaning it must be easy for deep-pocketed market participants to trade.
Having a robust use case doesn’t hurt either.
“ERC-20 tokens would generally be preferred,” Wong said, referring to tokens issued on the Ethereum network. “Some names like Chainlink or Uniswap.”
And a Solana ETF could also be in the cards.
“We are in talks with the SFC right now,” Wong said. “We are in the process of launching new products.”
Tom Carreras is a market correspondent for DL News. Got news on Hong Kong and crypto ETFs? Contact us at tcarreras@dlnews.com.