According to Cointelegraph, the regulator in Hong Kong has approved the launch of spot Bitcoin and Ether exchange-traded funds (ETFs), which will be significantly different from their US counterparts starting on April 30.
One of the issuers, ChinaAMC, reported that its spot price for Bitcoin and Ether
ETFs will monitor the performance of the crypto indexes listed on the Chicago Mercantile Exchange. There will be two ways to redeem: fiat money and cryptocurrency funds. Furthermore, the Hong Kong dollar, Chinese yuan, and US dollar will be the three currencies that ChinaAMC's cryptocurrency ETFs are denominated in. The ETF custodians will be the cryptocurrency exchange OSL and investment asset manager BOCI-Prudential.
For issuer Harvest Global, the aforementioned two companies will also custody spot assets in Bitcoin and Ether ETFs. According to Harvest Global staff, BOCI and OSL "effectively solves problems such as excessive margin requirements, price premiums caused by missing short positions, and roll losses, thereby more accurately reflecting the real-time value of Bitcoin and Ethereum."
In the meantime, Bosera Asset Management and Hong Kong-based HashKey Capital will jointly introduce their spot Bitcoin and Ether ETFs. Its staff wrote about the cryptocurrency ETFs' future:
The adoption of the virtual asset spot ETF and the creative implementation of a currency-holding subscription mechanism, which enables investors to directly purchase corresponding ETF shares with Bitcoin and Ethereum, are anticipated to further foster the growth of the virtual asset market in Hong Kong and even Asia and draw in more capital from around the world.
Eric Balchunas, a senior ETF analyst at Bloomberg, stated on April 24 that the management fees for Hong Kong Bitcoin ETFs will vary from 0.3% to 0.99%. Compared to U.S. spot Bitcoin ETFs, where some issuers charge less than 0.25% annually, this is significantly higher. James Seyffart, a Bloomberg analyst, said that "a potential fee war could break out in Hong Kong over these Bitcoin & Ethereum ETFs.
On OSL and HashKey, two regulated cryptocurrency exchanges in Hong Kong, the three ETF issuers will create and redeem ETF shares. Investors will have until 11:00 am local time every day to cash in their shares or withdraw cryptocurrency until 4:00 pm. All issuers will have BOCI Prudential act as their custodian, and market makers will include Virtu Financial, Vivienne Court, and other companies.
