As ether ETFs in US take off, Hong Kong may look to staking

Trading volume of spot ether ETFs has dwarfed that of similar products in Hong Kong, where some crypto investors hope the SFC will approve staking

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A physical imitation of an ether cryptocurrency token on January 26, 2020. Photo: AFP

Published: 8:00am, 25 Jul 2024

The trading volume of US exchange-traded funds (ETFs) that invest directly in ether have dwarfed those traded in Hong Kong in their debut, but the Asian financial hub could boost its appeal by allowing staking, experts say.

Nine spot ether ETFs launched in the US on Tuesday, with more than US$1.07 billion changing hands within the first day of trading. Three ether ETFs in Hong Kong, in comparison, saw just HK$20 million traded on their April debut.

The city’s three ether ETFs – operated by Chinese fund houses ChinaAMC, Harvest International, and Bosera Asset Management, which is teaming with crypto firm HashKey Capital – recorded HK$4.85 million in trading volume on Wednesday.

Many attributed the meagre turnover to the fact that Hong Kong has a significantly smaller ETF market. The city had temporarily obtained a lead at the time by approving ETFs that directly track ether, the world’s second-largest cryptocurrency token behind bitcoin, as the US repeatedly delayed a decision on whether it would allow such products.

That advantage is now seen to be slipping away, adding to the challenges that Hong Kong faces in its effort to become a virtual asset hub.

“With the approval of Ethereum spot ETF trading in the US, Hong Kong’s previous advantages in the Ethereum ETF market no longer exist,” said Jason Jiang, a senior researcher at OKG Research, a unit under Hong Kong-listed blockchain firm OKG Technology Holdings.