Key Points
- Hong Kong’s Securities and Futures Commission approves the first batch of Bitcoin and Ether ETFs.
- The ETFs are set to begin trading on April 30, offering investors a safer way to invest in digital assets.
Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has given the green light for the first batch of spot Bitcoin and Ether exchange-traded funds (ETFs) to commence trading on April 30.
The inaugural group of approved ETFs includes those based on Bitcoin and Ether from China Asset Management (ChinaAMC), which will also begin trading on the aforementioned date.
Investing in Digital Assets
According to Thomas Zhu, head of digital assets and family office business at ChinaAMC, these ETFs will provide retail and institutional investors with a safer and more convenient method of investing in the underlying digital assets within a regulated framework.
He further emphasized that the ETFs’ in-kind feature would attract coin holders by offering the ease of converting coins to fully regulated ETFs managed by professional fund managers and regulated custodians.
Hong Kong currently boasts over 205 approved ETFs, as per the SFC’s homepage.
ETF Creation Models
Unlike the cash-creation model used by U.S. spot Bitcoin ETFs, Hong Kong plans to implement in-kind creation models for ETFs, allowing for the creation of new ETF shares using Bitcoin and Ether.
This approach could significantly increase assets under management (AUM) and trading volume for these products, according to a research note by Bloomberg ETF analyst Rebecca Sin.
The introduction of the first ETFs in Hong Kong could potentially spark a fee war among issuers, with each striving to offer the lowest fees to customers, as per Bloomberg ETF analyst James Seyffart.
The fees for the initial ETFs are already lower than anticipated, a promising sign according to Eric Balchunas, senior ETF analyst at Bloomberg.