2024-04-24
Hong Kong is making significant progress in its efforts to list the first batch of spot Bitcoin and Ethereum ETFs.
China's top asset managers are currently finalizing preparations to kickstart trading by April 30, bringing excitement to Asian crypto investors.
This follows the success of US spot Bitcoin ETFs, which amassed over $56 billion in assets within just three months of launch.
HashKey Capital and Bosera have announced that Hong Kong spot-ETFs will utilize an in-kind subscription and redemption mechanism.
This differs from the cash redemption model used by US funds, allowing for the exchange of underlying assets for ETF units and vice versa.
The in-kind approach is particularly appealing to crypto natives, market makers, and digital asset exchanges, offering greater efficiency and arbitrage opportunities, according to Evgeny Gaevoy, co-founder of crypto liquidity provider Wintermute Trading Ltd.
Trading for Bosera-HashKey Capital spot products will commence on April 30, with Hong Kong already permitting crypto-futures-based ETFs.
Currently, three such ETFs are listed: CSOP Bitcoin Futures, CSOP Ether Futures, and Samsung Bitcoin Futures.
However, their total assets amount to approximately $175 million, significantly less than US offerings like the $2.5 billion ProShares Bitcoin Strategy ETF, which is derivatives-based.
Setting realistic expectations for the Hong Kong ETF market is crucial, given the relatively modest size of the region's existing futures ETFs, commented Gaevoy.
Hong Kong has been competing with Singapore and Dubai for over a year to establish a tightly regulated hub for the virtual asset industry.
The demand for the upcoming ETFs will serve as an indicator of Hong Kong's progress in this endeavor.
Potential sources of demand include Chinese wealth held in the city, as well as crypto exchanges and market makers operating in the Asia-Pacific region.
Bloomberg Intelligence ETF Analyst Rebecca Sin estimated that the Hong Kong Bitcoin ETFs could accumulate approximately $1 billion in assets under management over two years.
In contrast, US-based Bitcoin funds from industry giants like BlackRock Inc. and Fidelity Investments have already garnered global interest.
Hong Kong's prospective issuers, Harvest Global and Bosera Asset Management, have yet to achieve similar recognition. Roger Li, co-founder of One Satoshi, said that Hong Kong lacks the "BlackRock" effect to draw upon in this regard.
