After US success: Bitcoin ETFs approved in Hong Kong
After US success: Bitcoin ETFs approved in Hong Kong
The regulatory authority in Hong Kong has reportedly approved the launch of Bitcoin and Ethereum spot ETFs today. The announcement was made by the subsidiary of Chinese asset manager China Asset Management, which has over USD 250 billion in assets under management and had submitted an application for the investment products.
China Asset Management (Hong Kong) has received approval from the Hong Kong Securities and Futures Commission to offer virtual asset management services to investors. It now plans to issue ETF products that can invest in spot Bitcoin and spot Ethereum.
From the announcement
Bitcoin ETFs are enjoying great popularity
This development follows the positive experience in the United States, where Bitcoin ETFs have seen impressive capital inflows since their approval on January 10 of this year. Ethereum spot ETFs, on the other hand, have not yet been approved in the US and Bloomberg's ETF experts currently believe that approval in the US is unlikely in the near future.
As reported several times by Blocktrainer.de, one record follows another for exchange-traded Bitcoin funds in the US. The Bitcoin ETF from BlackRock ($IBIT), the world's largest asset manager, is the fastest growing ETF of all time. In addition, $IBIT is currently the ETF with the longest active inflow streak: the investment product has so far sucked Bitcoin off the market for 64 consecutive trading days. Since admission, the eleven Bitcoin ETFs have recorded cumulative net inflows of over USD 12.5 billion. This clearly shows how attractive such ETFs are as investment vehicles and that confidence in Bitcoin is growing steadily.
The Bitcoin price reacted positively to the news from Hong Kong and continued to recover from the sell-off at the weekend triggered by geopolitical uncertainties.
Hong Kong approves Bitcoin spot ETFs
The Hong Kong Securities and Futures Commission (SFC) has approved the application of Harvest Global Investment, a major Hong Kong asset manager with almost USD 300 billion in assets, in addition to that of China Asset Management.
Both financial service providers want to work with OSL, a leading virtual asset management and sub-custodian company, for their product. OSL emphasizes that its robust infrastructure provides a secure trading environment, which is critical to the operation of the ETFs that have just received approval.
In addition, Bosera Asset Management and HashKey Capital also received approval for their Bitcoin and Ethereum ETFs, which they will launch in partnership.
The launch of spot ETFs for digital assets not only provides investors with new asset allocation opportunities, but also reinforces Hong Kong's status as an international financial center and virtual asset hub.
Bosera Asset Management in a statement
It is not yet known when exactly the ETFs will have their first day of trading. Blocktrainer.de will report on further developments.
Hong Kong's potential
The approval of these ETFs in Hong Kong is part of a larger strategy to establish the region as a global hub for cryptocurrencies. In contrast to the stricter crypto regulations in mainland China, Hong Kong has launched a more welcoming policy towards crypto companies and services. The new products are expected to provide more asset allocation opportunities not only for local investors but also for international investors.
The successful launch and continued high inflows into the Bitcoin spot ETFs in the US could be an indicator that similar products will also be well received in Hong Kong. This would not only boost capital growth in the region, but also strengthen Hong Kong's position as a leading financial center for virtual assets.
According to a report by Bloomberg Intelligence, Hong Kong spot ETFs will be allowed to operate via the in-kind method, which experts say could make the investment products all the more successful and price-driving for the Bitcoin price. With the in-kind method, transactions are processed through the direct exchange of Bitcoin and do not have to be sold as with the in-cash method - which is used for Bitcoin spot ETFs in the US - which can incur fees and, above all, taxes.
Singapore-based crypto analytics firm Matrixport estimates that Hong Kong Bitcoin ETFs could see demand of around USD 25 billion from mainland investors. Bloomberg ETF expert Eric Balchunas, on the other hand, predicts a total of just USD 500 million in the optimistic case. The reasons Balchunas gives for this include the fact that mainland Chinese are not officially allowed to buy ETFs, the asset managers are small compared to BlackRock and Co, the fees and spreads are likely to be significantly higher than in the US and the Hong Kong capital market is generally not that big.
Just to be clear, all of this is clearly positive for Bitcoin as it opens up more opportunities to invest, I'm just saying it's a no-brainer compared to the US.
Eric Balchunas
How much demand there will actually be for the new funds in the Chinese Special Administrative Region, however, remains to be seen.
