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Hong Kong Approves First Wave of Spot Bitcoin and Ether ETFs for Trading

Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), recently greenlit the debut of spot Bitcoin (BTC) and Ether exchange-traded funds (ETFs), scheduled to commence trading on April 30, as per a Cointelegraph report.

The approved ETFs, spearheaded by China Asset Management (ChinaAMC), are poised to offer investors, both retail and institutional, a regulated avenue for delving into the world of digital assets.

Thomas Zhu, head of digital assets and family office business at ChinaAMC, emphasized the allure of these ETFs, stating, “The in-kind feature also attracts coin holders by offering the ease of converting coins to fully regulated ETFs managed by professional fund managers and regulated custodians.”

Hong Kong’s approach stands in contrast to the cash-centric model seen in the United States, with a focus on in-kind creation models that facilitate the generation of new ETF shares through BTC and ETH.

Rebecca Sin, an ETF analyst at Bloomberg, highlighted the significance of this strategy, noting, “Hong Kong is aiming for in-kind creation of the ETF, unlike the US, where the transaction is cash only — in the US, it’s cash in, Bitcoin ETF out, while Hong Kong aims for Bitcoin in, ETF out.”

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Anticipation surrounds the potential for a fee competition among ETF issuers in Hong Kong, with James Seyffart, another Bloomberg ETF analyst, suggesting, “A potential fee war could break out in Hong Kong over these Bitcoin and Ethereum ETFs.”

Harvest, in particular, is set to shake things up with a full fee waiver and a meager fee of 0.3% after the waiver.

Eric Balchunas, a senior ETF analyst at Bloomberg, expressed optimism regarding the lower-than-expected fees for the initial ETFs, deeming it a promising indicator.

He observed, “Fees are 30bps, 60bps, and 99bps which is on average lower than we thought, good sign.”

The impending debut of these ETFs in Hong Kong not only marks a milestone in the region’s financial landscape but also signals a significant step forward in the mainstream adoption of cryptocurrencies within a regulated framework.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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