The first wave of spot Bitcoin and Ether exchange-traded funds (ETFs) have been officially approved to start trading in Hong Kong on April 30.
Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), announced the official approval of the first batch of spot Bitcoin and Ether ETFs on April 24, according to a press release shared with Cointelegraph.
The first batch of approved Hong Kong-based ETFs also include China Asset Management’s (ChinaAMC) Bitcoin and Ether-based ETFs, which will start trading on April 30.
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, according to Thomas Zhu, head of digital assets and head of family office business at ChinaAMC. He wrote in the official announcement:
“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.”
There are currently over 205 approved ETFs in Hong Kong, according to the financial regulator’s homepage.
List of approved Hong Kong ETFs. Source: SFC
Unlike the cash-creation model of the United States spot Bitcoin ETFs, Hong Kong aims to offer in-kind creation models for ETFs that enable the creation of new ETF shares by using BTC and ETH.
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, according to a research note by Bloomberg ETF analyst Rebecca Sin, shared in a March 26 X post by Eric Balchunas:
“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.”
Hong Kong ETFs could see a potential fee war
The launch of the first ETFs in Hong Kong could lead to issuers racing to offer the lowest fees to customers, according to an April 24 X post by Bloomberg ETF analyst James Seyffart. He wrote:
“A potential fee war could break out in Hong Kong over these Bitcoin and Ethereum ETFs. Harvest coming in hot with a full fee waiver and the lowest fee at 0.3% after waiver.”
The fees for the first ETFs are already lower than previously expected, which is a promising sign, according to Eric Balchunas, senior ETF analyst at Bloomberg, who wrote in an April 24 X post:
“Fees are 30bps, 60bps, and 99bps which is on average lower than we thought, good sign.”
