How crypto can help restore Hong Kong’s financial glory

For those unfamiliar with cryptocurrency, this is a major milestone in Asia and across the world as it opens the road for adoption and investment in cryptocurrency, moving the asset class from niche to mainstream. Although the US allowed spot bitcoin ETFs in January, it only recently approved applications to list spot ether ETFs; a second round of approvals will be needed before the products can begin trading. The US’ decision on ether ETFs came a month after Hong Kong became one of the first in the world to approve them.

Hong Kong’s first-mover advantage could attract a new wave of fintech activity and talent to the region, leveraging its forward-thinking regulatory framework. These steps have promoted the city as a global digital asset hub.

Hong Kong already has plans to maintain its advantage over the US by looking at strategic ways to keep developing as a cryptocurrency hub. It could do this by approving advanced financial products before the US does. For example, Hong Kong could allow yield-earning options such as ether ETF staking.

Staking involves locking cryptocurrency tokens to a blockchain network for a set period of time to earn rewards, a practice that the US might be slower to approve. Hong Kong taking a progressive stance would not just be a regulatory success but an indirect endorsement of the potential of decentralised finance. This momentum could draw fintech investment to the region.

Hong Kong is also becoming one of the main destinations for major cryptocurrency conferences, which are drawing foreign investment from venture capitalists into local cryptocurrency start-ups. In 2023, the Web3 Festival attracted a crowd of 50,000 attendees, including many investors from around the world. These events, which