Bitcoin, Ethereum ETFs: Will Hong Kong get an edge with new approvals?

    Hong Kong has approved the first batch of spot BTC, ETH ETFs. 
    Some ETFs will have in-kind creation and redemption features. 

Hong Kong has taken after the US by giving its approval for crypto Exchange-Traded Funds (ETFs) that are connected to Bitcoin (BTC) and Ethereum (ETH).

Three asset management firms, including Bosera, ChinaAMC (based in Hong Kong), and Harvest Fund, have been given the green light for preliminary approval.

It’s worth mentioning that Gary Tiu, the executive director of Hong Kong-based OSL Securities, pointed out an intriguing implication of this approval. He stated in a recent interview that it could give Asia a competitive advantage over the US.

Currently, no Ethereum (ETH) spot products have been authorized by the United States. Consequently, the Hong Kong managers hold an advantageous position as they introduce ETH products in Hong Kong.

OSL was approved as the first sub-custodian partner for ChinaAMC’s BTC and ETH ETFs. 

It is worth noting that the US spot ETH ETFs May approval odds have dimmed amidst the US SEC’s silence on the filings. But that’s not the only edge Hong Kong’s ETFs could have over the US. 

BTC, ETH ETFs in-kind subscription

Partnering with HashKey Capital, Bosera’s ETF offering allows users to easily subscribe and receive ETF shares by transferring Bitcoin (BTC) or Ethereum (ETH) directly instead of cash.

Instead, investors are given the option to swap their shares for real Bitcoin or Ethereum. However, American Bitcoin and Ethereum spot ETFs strictly provide cash payouts based on the value of the underlying assets.

According to investor and cryptocurrency analyst Simon Mow, Asia presents a chance for amassing additional Bitcoin due to the disparity between the two markets.

In Hong Kong, Bitcoin ETFs will offer direct transfer of Bitcoin during creation and redemption. This is an attempt to surpass US ETFs. The competition is fierce as entities in Asia are eagerly trying to amass Bitcoins.

Currently, Bitcoin was priced at $66,000 according to CoinMarketCap’s latest data, marking a 2.5% increase over the previous 24-hour period. This update came just a few hours following the approvals.

Antony Scarramucci, a Bitcoin advocate and ex-White House executive, stated that the market has not fully factored in the advancement’s implications yet.

“Hong Kong has approved Bitcoin and Ethereum ETFs. Not priced in.”

Previously, analysts at VanEck suggested that Chinese investors were driving the recent increase in gold demand and price hikes. As a result, they believed that the green light given to Bitcoin ETFs in Hong Kong could have a similar impact on the cryptocurrency market.

The specific dates when the ETFs will begin trading for the first time have not been revealed yet. However, it’s important to mention that the Hong Kong approvals indicate that the majority of the review process has been finished.

The Hong Kong Securities and Futures Commission hasn’t announced when the product launch and initial trading day will take place yet.

Even so, Gary Tiu of OSL affirmed that the approvals show that the launch day is “very soon.”

In Asia, we’ve taken the lead by giving the green light to ETH ETFs. But it’s important to note that the market reaction once trading begins is still uncertain.

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2024-04-15 18:15