Ethereum staking ETFs will soon be available in Hong Kong. Within six months, these new crypto products will hit the financial hub, and the city has even more plans for the future.
Launch of Ethereum Staking ETFs
Hong Kong is set to launch Ethereum staking exchange-traded funds (ETFs) in the next six months. After the successful launch of Bitcoin and Ethereum ETFs in April, which were warmly received by the financial sector, the city is eager to offer more crypto products. A Uniswap ETF or Chainlink ETF might follow the Ethereum staking ETFs.
Key Role of HashKey Capital
Vivien Wong, a partner at HashKey Capital, a crypto asset management firm, played a vital role in launching Hong Kong’s spot Bitcoin and Ethereum ETFs. Wong shared that as soon as spot Ethereum ETFs were approved in the US, there was immediate interest in an Ether staking product. The firm has been in talks with the Hong Kong Securities and Futures Commission about the need for an Ether staking ETF. Regulators responded positively, asking for a detailed proposal.
US Spot Ethereum ETFs
Nine spot Ethereum ETFs are expected to launch in the US soon. Ethereum staking ETFs allow users to lock in their Ether holdings and earn a 3% yield, a process called staking. Unlike spot Ethereum ETFs, which give investors easy exposure to Ether through their brokerage accounts, staking ETFs offer the additional benefit of earning yield.
Fees and Launch Timeline
In Hong Kong, holders of these ETF shares must pay a management fee between 0.3% and 0.99%, depending on the fund. According to Wong, launching a new Ethereum staking product will likely take about six months.
Bitcoin ETF Issuers
Here are some key Bitcoin ETF issuers:
- Blackrock (IBIT) – $18.4 billion AUM, $32.20 price
- Grayscale (GBTC) – $16.38 billion AUM, $50.15 price
- Fidelity (FBTC) – $9.53 billion AUM, $49.43 price
- Ark/21 Shares (ARKB) – $2.62 billion AUM, $56.46 price
- Bitwise (BITB) – $1.07 billion AUM, $30.80 price
- VanEck (HODL) – $569.24 million AUM, $63.87 price
- Valkyrie (BRRR) – $501.52 million AUM, $16.01 price
- Invesco/Galaxy (BTCO) – $395.5 million AUM, $56.49 price
- Franklin Templeton (EZBC) – $334.46 million AUM, $32.77 price
- WisdomTree (BTCW) – $77.31 million AUM, $60.01 price
Hong Kong’s Fintech Ambitions
Hong Kong aims to become a fintech powerhouse by offering innovative products that aren’t yet available in the US. The process of launching these products has been smooth, attracting two types of investors: those who want to “buy and hold” and crypto natives. Crypto natives, in particular, appreciate the ETFs’ design, which allows for timely creation and redemption processes used in over-the-counter trading.
DeFi and Metaverse in Hong Kong
Hong Kong’s finance watchdogs are also focused on DeFi (decentralized finance) and the metaverse. By leading in advanced products, Hong Kong hopes to attract investors from other regions, especially mainland China. Wong hopes that an endorsement from China will open up the market further and bring in more inflows.
Success of Hong Kong’s Crypto ETFs
Since their launch in April, Hong Kong’s crypto ETFs have amassed nearly $260 million in assets. While this may seem small compared to the $14.6 billion brought in by US spot Bitcoin ETFs since January, it’s a significant achievement given Hong Kong’s ETF market size. The excitement around these products is palpable, with financial institutions, wealth managers, distributors, and high-net-worth individuals gradually becoming more comfortable with them.
Overcoming Challenges
Launching these products wasn’t guaranteed. Opinions about crypto had soured in the region due to scandals, such as the fraud case surrounding the Hong Kong crypto exchange JPEX. Despite these challenges, the ETFs have been successful.
Potential for Uniswap and Chainlink ETFs
Wong mentioned that other cryptocurrencies might also get their own ETFs, though the choices aren’t obvious. For Hong Kong regulators to approve new crypto ETFs, the underlying token must be publicly tradable on registered virtual asset trading platforms and be highly liquid. Having a robust use case is also beneficial. ERC-20 tokens, like Chainlink or Uniswap, are generally preferred.
Future of Solana ETF
A Solana ETF might also be in the cards. Wong said they are currently in discussions with the Securities and Futures Commission about launching new products. Hong Kong is eager to expand its offerings and maintain its position as a leader in fintech innovation.
By launching Ethereum staking ETFs and exploring other crypto products, Hong Kong is positioning itself as a major player in the crypto and fintech industries. The financial hub’s efforts are drawing attention from investors globally, and its future looks promising.
