Layer 1 ETF approvals could drive Hong Kong crypto adoption

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%.

Ekta Mourya FXStreet

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.

Author

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

Dogecoin ticks lower as low Open Interest, funding rate weigh on buyers

Dogecoin extends its decline as risk-off sentiment dominates across the crypto market. DOGE’s derivatives market remains weak amid suppressed futures Open Interest and perpetual funding rate.

Crypto Today: Bitcoin, Ethereum, XRP decline as risk-off sentiment escalates

Bitcoin remains under pressure, trading above the $87,000 support at the time of writing on Tuesday. Selling pressure has continued to weigh on the broader cryptocurrency market since Monday, triggering declines across altcoins, including Ethereum and Ripple.