- Hong Kong prepares for spot-Bitcoin and Ether ETFs amid competition with Singapore and Dubai
- US Bitcoin funds garner $56 billion assets, while Hong Kong’s issuers lack similar recognition
- Regulatory distinctions and in-kind redemption mechanisms differentiate Hong Kong’s ETF landscape from the US
Hong Kong is poised to introduce a series of cryptocurrency exchange-traded funds (ETFs), taking a cue from the United States’ efforts. Hong Kong wants its tier 1 level cities to progress in establishing itself as a digital asset hub.
Several leading asset managers in China are in the final stages of preparations to launch spot-Bitcoin and Ether ETFs and they are anticipated to start trading by the end of April.
These developments are Hong Kong’s ongoing efforts to position itself as a regulated centre for virtual assets, part of its broader strategy to create its image as a modern financial hub following recent challenges.
The forthcoming ETFs are expected to draw interest from various quarters including Chinese investors with wealth invested in Hong Kong as well as crypto exchanges and market participants active in the Asia-Pacific region. Analysts project that these funds could accumulate around $1 billion in assets under management over a two-year period.
However, it’s worth noting that the US has already witnessed success with Bitcoin funds offered by major players like BlackRock Inc. and Fidelity Investments which has garnered significant global attention and investment inflows.
In comparison, the Hong Kong-based issuers such as Harvest Global Investments Ltd, the local unit of China Asset Management and a partnership between HashKey Capital Ltd. and Bosera Asset Management (International) Co. may lack comparable brand recognition.
Despite this, Hong Kong’s regulatory landscape offers some distinctions. While the US Securities & Exchange Commission recently permitted ETFs directly investing in Bitcoin, it remains cautious toward the crypto market, especially in light of past market volatility and incidents of fraud. Conversely, Hong Kong has granted initial approval for spot-Bitcoin and Ether funds, according to the issuers.
Additionally, the proposed ETFs in Hong Kong will be operating on an in-kind subscription and redemption mechanism, enabling the exchange of underlying assets for ETF units unlike the cash redemption model adopted by US funds.
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