Key Points
- HashKey Capital has just confirmed that Bitcoin and Ethereum ETFs in Hong Kong will start trading on April 30.
- The move tests Hong Kong’s ambition to be a crypto hub, Bloomberg says.
Hong Kong is on its way to launching Bitcoin and Ethereum ETFs, following in the footsteps of the US, which saw the approval of the BTC ETFs at the beginning of this year.
The launch brings optimism for Asia crypto investors after witnessing the success of the US-approved BTC ETFs.
According to the latest reports coming from HashKey Capital-Bosera, Hong Kong will start trading the BTC and ETH ETFs on April 30.
The ETFs will adopt an in-kind subscription and redemption mechanism, which allows the exchange of underlying assets for ETF units and vice versa. This mechanism is in contrast to the US’s cash redemption model.
Evgeny Gaevoy, the co-founder of crypto liquidity provider Wintermute Trading Ltd., notes that the in-kind approach is attractive to crypto enthusiasts, market markers, and crypto exchanges, and it offers greater efficiency and arbitrage opportunities.
Gaevoy also highlighted the importance of setting realistic expectations for the Hong Kong ETF markets, saying that this is crucial, especially considering the relatively “modest size of the region’s existing futures ETFs.”
Hong Kong tests its crypto hub ambition
Today, Bloomberg published an article analyzing Hong Kong’s ambition to be a digital asset hub, and noting that the trading of BTC and ETH ETFs will be a move that tests this aim.
According to the article, Hong Kong has been vying with the likes of Singapore and Dubai to develop a regulated home for the crypto industry. This is part of the plan to restore the city’s reputation as a modern financial center following a crackdown on dissent.
The publication also notes that the level of demand for the upcoming ETFs will offer clues on the progress that Hong Kong is making. A potential source of demand is the Chinese wealth in the city, and others include crypto exchanges and market makers active in the Asia-Pacific region.
Bloomberg Intelligence ETF analyst Rebecca Sin estimated that the funds could amass $1 billion in assets under management over a couple of years.
The prospective Hong Kong issuers include Harvest Global Investments Ltd., the local unit of China Asset Management, and a partnership between HashKey Capital Ltd. and Bosera Asset Management (International) Co.
Bloomberg made a comparison with the BTC ETFs in the US, which saw important names such as BlackRock, and said that neither of the companies mentioned above has such recognition.
Hong Kong is set to follow in the footsteps of the US by listing a batch of cryptocurrency ETFs, providing a window on whether the city is making progress on fashioning a hub for digital assets https://t.co/XdQxhqz1Tq pic.twitter.com/zrBOwwjYHe
— Bloomberg (@business) April 24, 2024
Roger Li, co-founder of One Satoshi, a chain of stores in Hong Kong, said that Hong Kong does not have a BlackRock of its own to see the same ETF effects regarding investment flows.
He added that the ETF demand expectations in the city must be calibrated in line with the smaller financial sector.
On April 15, Reuters reported that Hong Kong’s securities regulator approved the first spot Bitcoin and Ethereum exchange-traded funds (ETFs).