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Following the recent launch of spot Ethereum ETF in Hong Kong, OkLink, a global leader in blockchain data services, expressed optimism about regulators approving similar products for other leading blockchain protocols in the future. The firm believes this move could enhance Hong Kong’s appeal as a hub for crypto innovation compared to other regions with stricter regulations.
On April 30, Hong Kong became one of the first major financial centers to approve both Bitcoin and Ethereum ETFs, albeit several months after the U.S. launched its first Bitcoin ETFs. While acknowledging the Ethereum ETF’s initial trading volume has fallen short of expectations, OKLink suggests the early launch provides a competitive advantage for Hong Kong’s crypto market.
OKX's organization in Hong Kong, OKLINK, pointed out that considering that HK has approved the application for spot ETF of Ethereum based on the POS, more L1 tokens may be accepted as ETFs in the future, such as Solana, which will greatly increase HK's attractiveness to various…
— Wu Blockchain (@WuBlockchain) May 18, 2024
This optimism partly stems from the perception that the SEC remains hesitant to approve Ethereum ETFs. OKLink anticipates a potential surge in investment into the Hong Kong ETF once the underlying Ethereum price recovers from its current decline.
The specific approval of an Ethereum ETF based on a Proof-of-Stake (PoS) consensus mechanism leads OKLink to believe similar products for other PoS protocols could be forthcoming. The firm identifies established public blockchains like Solana as potential beneficiaries of this trend, further bolstering Hong Kong’s attractiveness to various Web3 projects.
However, the current Hong Kong Ethereum ETF’s market share remains modest, accounting for just 15.11% of the region’s ETF market with approximately HK$327 million in assets under management. OKLink attributes this to the broader market downturn and the Ethereum protocol’s recent “Cancun” upgrade failing to deliver a significant boost to Layer 2 scaling solutions, as many had anticipated.
While the initial Hong Kong Ethereum ETF’s performance has been muted, the regulatory approval itself holds broader significance. It signifies a willingness to embrace innovation within a controlled framework, potentially paving the way for a more diverse and competitive landscape for crypto investment in Asia. This approach could be closely watched by other regional financial centers seeking to balance regulatory oversight with fostering the growth of the digital asset industry.
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