Breaking Ground: Hong Kong's Unique Approach to $BTC and $ETH
Beginning on April 30, the Hong Kong spot B$BTC and ETH exchange-traded funds (ETFs) will enter the market, marking a notable departure from their American counterparts. Approved by Hong Kong's regulatory body, these ETFs are set to mirror the performance of the Chicago Mercantile Exchange’s crypto indexes. Investors will have the option to redeem their holdings in either fiat currency or cryptocurrencies, with the ETFs available in three different currency denominations: the U.S. dollar, Hong Kong dollar, and Chinese yuan. Acting as custodians for the ETFs, investment asset manager BOCI-Prudential and crypto exchange OSL aim to address several issues commonly associated with cryptocurrency investments, such as excessive margin requirements and price premiums.
Additionally, Harvest Global, another issuer, has entrusted BOCI and OSL with the custody of its spot Bitcoin and Ether ETF assets. Harvest Global anticipates that this move will help rectify concerns such as the absence of short positions and roll losses, thereby providing a more accurate reflection of the real-time value of Bitcoin and Ethereum.
Moreover, Hong Kong-based HashKey Capital is collaborating with Bosera Asset Management to launch their spot Bitcoin and Ethereum ETFs. The introduction of a currency-holding subscription mechanism by these entities is anticipated to stimulate further development in Hong Kong and Asian markets, attracting increased capital inflows from around the globe.
In terms of fees, Bloomberg senior ETF analyst Eric Balchunas has indicated that management fees for Hong Kong Bitcoin ETFs will range between 0.3% and 0.99%, considerably higher than those for U.S. spot Bitcoin ETFs. This discrepancy has prompted speculation about the potential for a fee competition in Hong Kong's ETF market, a sentiment echoed by Bloomberg analyst James Seyffart.
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