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Exciting news awaits as spot Bitcoin and Ethereum exchange-traded funds (ETFs) listed in Hong Kong are about to launch in just a few minutes. The anticipation is high, with expectations that the Hong Kong virtual asset spot ETFs’ debut scale will surpass the initial $125 million scale of the US, as stated by Zhu Haokang, Digital Asset Management Director and Family Wealth Director at China Asset Management.
“I am very confident that the initial listing scale of Hong Kong’s virtual asset spot ETF (more than US$125 million) can exceed the issuance scale on the first day of the United States,” Haokang said in a press briefing.
Excitingly, mainland Chinese investors are restricted from participating in these ETFs, but qualified investors from Hong Kong, along with institutional investors, retail investors, and international investors compliant with regulations, have a green light to engage.
The global interest in these ETFs is substantial, particularly from regions like Singapore and the Middle East that lack similar offerings. The unique feature of physical subscription allows Bitcoin miners to invest directly using their Bitcoin holdings.
Wayne Huang of OSL reassures that Ethereum’s potential classification as a security in the US will not impact Hong Kong crypto ETFs, thanks to the independent regulatory processes of the Hong Kong Securities and Futures Commission (SFC).
The clear regulatory framework established by the SFC enables Hong Kong to introduce the world’s first spot Ethereum ETF, recognizing Ethereum as a non-security virtual asset alongside Bitcoin. Huang emphasized Ethereum’s status as a non-security asset and its availability for retail investor inclusion.
“Hong Kong has already had a clear definition of Ethereum. Ethereum It is not a security, but the first non-securities virtual asset to be included in Hong Kong supervision together with Bitcoin, and it is one of the two targets that can be provided to retail investors,” Huang said.
Furthermore, discussions are underway to broaden the range of virtual assets available in Hong Kong’s ETF market.
The launch is expected to positively impact crypto prices by boosting liquidity, promoting regulatory compliance, and opening up new capital channels.
Bloomberg ETF analyst Eric Balchunas anticipates the launch of Bitcoin and Ethereum ETFs in Hong Kong to allow for a direct comparison of demand and investment flows between the two. He estimates that Ethereum may capture 10% or less of net flows compared to Bitcoin.
Note also that this is the first time we will get a clean look at how popular Eth is relative to btc in ETF format. What % of the net flows do you think they will grab? I think 10% or less, James more optimistic. https://t.co/ZKggtAGQIH
— Eric Balchunas (@EricBalchunas) April 29, 2024
Balchunas highlighted that the impact of the launch in Hong Kong may be modest compared to the US market, considering the nascent state of Hong Kong’s ETF market, which currently has $50 billion in assets, as well as factors like fee structures and restrictions on Chinese investors.
Nonetheless, he views the Hong Kong-listed crypto ETFs as a positive development for Bitcoin adoption in the long run.
Bitcoin’s price has seen an upward trend in the past few hours, currently trading at $64,000, up over 1.5% after briefly dropping below $62,000 earlier today, according to CoinGecko.
Meanwhile, Ethereum is holding steady around $3,200, showing a slight decline of 1.4% in the last 24 hours.
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