Hong Kong is making progress towards launching Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) through spot markets, as local regulatory bodies have given the green light to at least three local companies.
According to a report from Reuters, the Hong Kong Securities and Futures Commission (SFC) gave conditional approval for the first Bitcoin and Ethereum spot Exchange-Traded Funds (ETFs) on April 15.
Three Chinese asset management firms based offshore, which are Harvest Fund Management (Hong Kong), Bosera Asset Management, and China Asset Management, plan to introduce Bitcoin and Ether ETFs in the near future.
The report states that Harvest and Bosera in Hong Kong have been given provisional green lights from the Securities and Futures Commission (SFC) to introduce their respective ETFs.
Instead, the Hong Kong branch of China Asset Management, referred to as ChinaAMC, announced they have obtained regulatory permission to offer virtual asset management and are creating Bitcoin and Ethereum spot Exchange-Traded Funds (ETFs) in the meantime.
In simpler terms, if an ETF (Exchange-Traded Fund) application submitted by a company in Hong Kong meets most of the securities regulator’s conditions, it will receive a letter granting conditional approval. However, there are still requirements that need to be met, such as paying fees, submitting necessary documents, and obtaining listing approval from the Hong Kong Stock Exchange (HKEX).
In collaboration with HashKey Capital based in Hong Kong, Bosera is planning to introduce Bitcoin and Ethereum ETFs. These ETFs will operate as in-kind ETFs, enabling the issuance of new shares using actual Bitcoins and Ethereums instead of cash.
An In-Kind creation model differs from a Cash-Create redemption model in the way ETF shares are generated. With an In-Kind model, new shares can be produced using non-cash assets, such as securities or commodities. Conversely, under a Cash-Create model, issuers can only generate new shares by paying cash. At present, US Bitcoin Spot ETFs employ the Cash-Create method due to local regulators’ preference for this redemption technique.
“Bosera stated that launching virtual asset spot ETFs in Hong Kong brings fresh investment options for consumers, while strengthening its reputation as a global financial hub specializing in virtual assets,” (paraphrased version)
Partnering with a major local digital asset platform like OSL Digital Securities, other ETF issuers such as ChinaAMC plan to introduce Bitcoin and Ethereum spot ETFs.
At the time of publication, CryptoMoon reached out to Bosera and Harvest for their thoughts on the pending ETF approval in Hong Kong, yet failed to secure a comment from them.
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2024-04-15 15:07