Layer 1 ETF approvals could drive Hong Kong crypto adoption

Source Fxstreet
May 18, 2024 13:23
  • Hong Kong’s approval of Spot Ethereum ETF could pave the way for more Layer 1 tokens being accepted as ETFs. 
  • OKX’s Hong Kong branch OKLINK pointed out that Hong Kong’s attractiveness may have increased among crypto projects. 
  • Coinbase’s recent institutional research report showed that chances of Spot Ethereum ETF getting approved are 30 to 40%. 

Bitcoin and Ethereum Spot ETFs made their debut in Hong Kong on April 30. Following the approval, while ETH holders in the US await the Securities and Exchange Commission’s decision on Spot Ether ETF applications, Hong Kong is an attractive destination for crypto projects. 

Ether ETF approval could open gates to more Layer 1 ETFs in Hong Kong

Crypto exchange OKX’s Hong Kong entity OKLINK states that considering Hong Kong’s approval of the spot Ether ETF, more Layer 1 tokens could find acceptance here. The exchange cites Solana, one of Ethereum’s competitors as an example. 

The acceptance of more Layer 1 chains as ETFs is expected to greatly increase the Asian city’s attractiveness for projects and investors. 

Jason Jiang, researcher at Ouke Cloud Chain Research Institute was quoted in OKX’s research and said, 

The significance of Hong Kong's issuance of virtual asset spot ETFs is not that it can bring major changes to the market in the short term, but that it signals that Hong Kong financial institutions will accelerate their embrace of virtual assets.

One of the leading factors that makes Hong Kong’s ETFs more attractive is the option for physical redemption. Native investors consider this a lucrative option when compared to US Spot Ether ETFs. 

The fee rate remains relatively high, resulting in a disadvantage and a restricted flow of liquidity and funds to the city’s ETFs. The report states that the recent decline in Bitcoin prices may be one of the factors affecting the low inflow of capital to these assets. 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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