Hong Kong’s securities regulatory body, SFC, has approved the launch of Bitcoin and Ethereum ETFs, offering investors a regulated and secure investment option starting April 30th.
Approval Announcement
The Securities and Futures Commission (SFC) of Hong Kong recently greenlit the trading of the country’s first wave of spot Bitcoin and Ether exchange-traded funds (ETFs), with trading scheduled to commence on April 30th. This approval marks a significant step in the adoption of cryptocurrencies within Hong Kong's financial landscape.
The approval of these ETFs provides both retail and institutional investors with a safer and more convenient avenue to invest in cryptocurrencies within a regulated framework.
ChinaAMC will be among the first to offer Bitcoin and Ether-based ETFs in Hong Kong, with their products set to hit the market on April 30th. This rapid turnaround from approval to trading, a mere 15 days, underscores the growing demand for regulated crypto investment options in Hong Kong.
In-kind Creation Model
Unlike the cash-only creation model adopted in the United States, Hong Kong's ETFs will employ an in-kind creation model. This model allows the creation of new ETF shares using Bitcoin and Ethereum, potentially driving up assets under management (AUM) and trading volume for these products.
Thomas Zhu, head of digital assets at ChinaAMC, emphasized the appeal of these ETFs, writing,
“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. With the growing adoption of ETFs in institutional asset allocation and retail trading in Hong Kong, we expect robust demand for our offerings.”
Global Context
The approval of Bitcoin and Ethereum ETFs in Hong Kong follows a similar move made by the United States in January 2024, when the US Securities and Exchange Commission (SEC) approved 11 Spot Bitcoin ETFs. However, the US is still grappling with the approval of a Spot Ethereum ETF, with Standard Chartered Bank revising its forecast for its arrival. This discrepancy between the two markets highlights the SEC’s difficult stance towards most crypto investment products.
Competition in the ETF Space
With the imminent launch of Bitcoin and Ethereum ETFs in Hong Kong, competition in the ETF space is expected to intensify. As more ETFs enter the market, there is likely to be a race to offer the lowest fees for these investment products. This competition could ultimately benefit investors, leading to more competitive pricing and improved product offerings.
These ETFs also offer investors a regulated and secure means to invest in digital assets, further bridging the gap between traditional finance and the crypto market. As trading begins on April 30th, all eyes will be on Hong Kong to gauge the reception of these pioneering investment products.
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.
