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Ethereum Staking ETFs Coming to Hong Kong in Six Months, and the Financial Hub Won’t Stop There – DL News
- Hong Kong may launch Ethereum staking ETFs within the next six months.
- Other crypto products, such as the Uniswap ETF or the Chainlink ETF, may follow.
- The Bitcoin and Ethereum ETFs launched in April have been met with enthusiasm 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 Hong Kong’s Bitcoin and Ethereum spot ETFs.
“As soon as Ethereum spot ETFs were approved in the US, people came running to us and said, ‘Are you going to launch an Ether staking product?’” Wong said. DL News.
He said regulators, such as Hong Kong’s Securities and Futures Commission, are engaging with 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 noteworthy.
There are nine spot Ethereum ETFs expected The U.S. launch will happen in a few days, once the Securities and Exchange Commission has finalized the applications.
Ethereum ETF Staking
Ethereum is designed so that users can choose to lock up their Ether and earn a 3% return 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 return.
In fact, in Hong Kong, holders of these ETF shares must pay a management fee that varies between 0.3% and 0.99%, depending on the fund chosen.
“To launch a new Ethereum product, it will probably take another six months or so,” Wong said.
Waiting for the mainland
According to Wong, Hong Kong is so eager to offer products that don’t yet exist in the United States because the government wants the city to become a fintech powerhouse.
And the process is proceeding “pretty smoothly,” he said.
Already, existing crypto ETFs are attracting two types of investors: people who just want to “buy and hold” and crypto natives, Wong said. Crypto natives, in particular, have been enticed by the ETF’s design.
According to Wong, the timely process of creating and redeeming funds allows investors to use them for over-the-counter trading purposes.
But by taking a leading role and offering cutting-edge products, the hope is that Hong Kong can attract investors from other jurisdictions, particularly mainland China.
“I hope that in the short or medium term someone from China will give their support [of the crypto ETFs]and we will see more inflows,” Wong said. “We are waiting for this to open up this market,” he added.
A huge success
Hong Kong crypto ETFs have towed in nearly $260 million in assets since they launched in April, for The block data.
Compared to spot Bitcoin ETFs in the U.S., which have brought in $14.6 billion since Jan. 11, that might seem like a small figure.
But considering that Hong Kong’s ETF market is 168 times smaller than its U.S. counterpart, the products have been wildly successful. “There’s definitely excitement,” Wong said.
Whether it is financial institutions, asset managers, distributors or high-net-worth individuals, the entire Hong Kong market is slowly digesting the products and becoming increasingly comfortable with them, he said.
It wasn’t a guaranteed victory.
Opinion on cryptocurrencies has hardened in the region after some of the scandals of the last bear market, particularly the fraud case surrounding Hong Kong cryptocurrency exchange JPEX.
Uniswap ETFs?
Wong said that other cryptocurrencies will likely have their own ETFs in the future, but neither choice is obvious, he said.
For Hong Kong regulators to approve new crypto ETFs, the underlying token must be publicly tradable via registered virtual asset trading platforms.
And it needs to be highly liquid, meaning it needs to be easy to trade even for deep-pocketed market participants.
Having a solid 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.”
A Solana ETF may also be in the works.
“We are talking to the SFC right now,” Wong said. “We are moving forward with new product launches.”
Tom Carreras is a market correspondent for DL News. Have a tip on Hong Kong and cryptocurrency ETFs? Contact us at tcarreras@dlnews.com.