Bitcoin and Ether ETFs approved in Hong Kong, Trading starts April 30

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uyobong6.8 K5 months ago4 min read

KEY FACT: The Securities and Futures Commission (SFC) of Hong Kong has approved Bitcoin and Ether ETFs and trading is expected to start on April 30, 2024.

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Bitcoin and Ether ETFs approved in Hong Kong

Hong Kong’s financial regulator, the Securities and Futures Commission (SFC) has announced the official approval of the first batch of spot Bitcoin ($BTC) exchange-traded funds (ETFs) today, April 24, 2024. The first batch of the approved Hong Kong-based ETFs also includes China Asset Management’s (ChinaAMC) Bitcoin and Ether-based ETFs, which will start trading on April 30.

Hong Kong is the special administrative region of the People's Republic of China with 7.4 million residents of various nationalities in a 1,104-square-kilometre territory and has become the latest country to approve spot ETFs for Bitcoin and Ether with local regulators issuing approvals to at least three local issuers.

The ETFs would be issued by three asset managers including Hong Kong units of Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC). The Bitcoin and Ether ETFs approved for Hong Kong are the in-kind creation models which that enable the creation of new ETF shares by using BTC and ETH and is different from the cash-create model in the United States.

List of ETFs launching in Hong Kong. Source: Bloomberg

Analysts assert that Hong Kong’s in-kind ETF creation model could be a significant opportunity to considerably increase assets under management (AUM) and trading volume for these products. In the words of Rebecca Sin, Bloomberg ETF analyst:

“Hong Kong is aiming for in-kind creation of the ETF, unlike the US, where the transaction is cash only — in the US, it’s cash in, Bitcoin ETF out, while Hong Kong aims for Bitcoin in, ETF out. This could be an opportunity for the market.” - Source

With this development, the financial hub would be Asia's first to accept cryptocurrency products as a mainstream investment tool, and the products have also received official regulatory approval from the Securities and Futures Commission, as stated on the Hong Kong markets watchdog's website.

Thomas Zhu, head of digital assets and head of family office business at ChinaAMC on his part maintains that the ETFs will offer retail and institutional investors a safer and more convenient way to invest in the underlying digital assets under a regulated framework.

“The in-kind feature also attracts coin holders by offering the ease of converting coins to fully regulated ETFs managed by professional fund managers and regulated custodians. With the growing adoption of ETFs in institutional asset allocation and retail trading in Hong Kong, we expect robust demand for our offerings.”

Crypto ETFs approval in Hong Kong comes three months after the U.S. approved its first ETFs to track spot bitcoin. So far, the ETFs in the U.S. have already drawn roughly $12 billion in net inflows while significantly contributing to a surge in bitcoin's price so far in 2024.

Are Bullish about BTC and ETH?

Bitcoin has gained more than 50% this year and hit an all-time high of $73,803 in March. It is trading around $65,000 as of the time of this publication. It is widely believed that this approval would further spread the adoption of BTC and ETH. We are hopeful that countries that are directly benefiting from the Hong Kong economy could likely adopt crypto ETFs. Would this bring BTC to $100k in 2024?

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