Compiled by: Golden Finance
On April 29, China Asset Management (Hong Kong) Co., Ltd. held a press briefing on "Asia's first launch - Spot China Asset Management Bitcoin ETF and Spot China Asset Management Ethereum ETF". Golden Finance excerpted and sorted out the questions and answers at the briefing for readers' reference.
Golden Finance Reporter: How much money is expected to flow into the Bitcoin spot ETF of the three funds as a whole on the launch day of April 30? How much money will flow into the Ethereum spot ETF?
Zhu Haokang: In the United States, except for Grayscale, the other 10 ETF issuers had a scale of US$125 million on the first day on January 10. We firmly believe that the scale of the three issuers in Hong Kong (China Asset Management Hong Kong, Harvest Global Asset Management and Bosera Funds (International)) will exceed this figure, and we expect China Asset Management Hong Kong's product to be the largest among them. We will announce the specific figures to you at 9:30 tomorrow morning, so please pay attention.
Golden Finance Reporter: What are the advantages of Hua Xia Fund's virtual currency spot ETF compared with the other two ETFs?
Zhu Haokang: China Asset Management Hong Kong owns the world's largest offshore CSI 300 ETF, the world's largest Hang Seng ETF, the largest Nasdaq 100 ETF in Hong Kong, the largest Japanese stock ETF in Hong Kong, the largest European stock ETF in Hong Kong, the largest Hong Kong stock biotech ETF in Hong Kong, and the largest MCA50 ETF in Hong Kong.
In summary, whether it is investment managers, capital markets, operations, trading, sales, compliance and other departments, China Asset Management has experience working in world-renowned asset management companies, which ensures our smooth and efficient operations and management. And compared with other companies, our team is very stable. The rich custody, trading, market making, and business resources we have accumulated over 16 years are unmatched by other companies.
Golden Finance Reporter: Can you introduce the important service providers involved in Hua Xia’s virtual currency spot ETF?
Zhu Haokang: We select leading service providers in the industry to provide investors with the best experience. Our main partners include: BOC Prudential Custody: The third largest fund custodian in Hong Kong and the largest custodian of our Chinese capital. BOC Prudential has rich custody experience and strong strength, providing us with professional and efficient custody services to ensure the safety of investors' assets. OSL: The only listed licensed exchange in Hong Kong and the exchange with the largest custody and insurance scale among all compliant exchanges in the world. OSL has a leading advantage in compliance and security, providing investors with a reliable trading environment. So we have great confidence in our partners.
Golden Finance Reporter: In the process of communicating with regulators, what do you feel are the regulators' expectations for virtual currency spot ETFs?
Zhu Haokang: Regarding the communication with regulators, I think we can talk about the development of Hong Kong's external 3.0 and crypto asset fields in recent times. Since the Hong Kong Special Administrative Region Government issued a policy declaration on the development of crypto assets in Hong Kong on October 31, 2022, we have seen a top-down momentum to promote Hong Kong to become a global external 3.0 hub.
In addition, we have also seen the launch of spot ETFs for Bitcoin and Ethereum tomorrow in Hong Kong. These measures indicate the strong support of the Hong Kong government for the compliance development of the crypto asset ecosystem. We at Huaxia keep up with the times and actively embrace the organization team to conduct in-depth research on the crypto asset industry, especially real-world assets, We Securities Tokenization STO, and innovation of products such as crypto spot ETFs. We actively participate in the experimental sandbox of the Hong Kong Government Economic and Trade Administration. We believe that external 3.0 technology has been recognized in financial innovation and is increasing day by day. With the future opportunities brought by digital assets entering external 3.0, digital assets have become indispensable in the market. Due to the innovative tolerance and active efforts of the Hong Kong government and supervision, the development potential of Hong Kong's digital asset industry is huge.
Reporter: Compared with the spot Bitcoin ETF in the United States, what are the advantages of Hong Kong?
Zhu Haokang: Although the current US spot Bitcoin ETF market is very large, nearly $60 billion, we believe that Hong Kong has more advantages. The first is the unique physical subscription and redemption mechanism: Hong Kong allows investors to use Bitcoin or Ethereum spot to subscribe or redeem ETF shares, while the United States only supports cash transactions. This mechanism attracts traditional crypto investors, such as Bitcoin miners, as well as investors who have demand for physical assets. The second is to cover a wider range of investors: Hong Kong is one of the first jurisdictions in the world to allow retail investors to participate in Ethereum spot ETF transactions, attracting investors from Asia, Europe and North America. At the same time, since Hong Kong's trading hours are different from those in the United States, it also attracts some investors active in the Asian time zone. The third is more accurate price tracking: Hong Kong spot Bitcoin ETF directly holds Bitcoin rather than futures contracts, which can more accurately track the actual market price of Bitcoin. In contrast, the US futures Bitcoin ETF is affected by rolling costs, and the tracking deviation may be as high as 60%, which will harm investors' returns. The fourth is the potential scale transfer: Hong Kong futures Bitcoin ETF has a certain scale, and investors may transfer part of their funds to spot ETFs, further increasing the trading volume and liquidity of spot ETFs.
Reporter: After the launch of the Bitcoin spot ETF in the United States, the price of Bitcoin has increased significantly. Will the launch of the Hong Kong ETF stimulate the price increase of cryptocurrencies?
Zhu Haokang: The launch of cryptocurrency ETFs and the participation of individual investors will have multiple positive effects on the cryptocurrency market. First, the Hong Kong crypto spot ETF market allows individual investors to participate in transactions, which will attract more investors to enter the market and inject liquidity into the market. Second, the compliance operation of cryptocurrency spot ETFs will promote the compliance process of the entire digital asset industry. Third, cryptocurrency spot ETFs will become an important channel for incremental funds to enter. Fourth, the difference between Bitcoin spot ETFs and spot prices may bring arbitrage opportunities, attracting market makers and arbitrage investors to participate. Fifth, the launch of cryptocurrency spot ETFs will bring the influence of factors in traditional markets into the cryptocurrency market, such as market sentiment, volatility and liquidity. Sixth, as an international financial center, Hong Kong has unique geographical advantages and will attract more Chinese investors to trade during the Asian time period. Seventh, cryptocurrency ETFs allow investors to purchase through brokers like buying stocks, providing convenience for investors who are unwilling or unable to hold cryptocurrency assets.
Reporter: Hong Kong's Ethereum spot ETF is the first of its kind in the world. If the United States eventually deems Ethereum a security, what impact will it have on existing Ethereum spot ETFs?
Zhu Haokang: The US's recognition of Ethereum will not affect Hong Kong's Bitcoin and Ethereum spot, because whether the US defines this as a regime will not affect the independent decision of the Hong Kong Securities and Futures Commission. Since we were discussing VIP licenses and which coins can be included in retail transactions with the Hong Kong Securities and Futures Commission from the very beginning, we have repeatedly had a legal basis to support us behind the scenes, indicating that neither BTC nor ETH is a regime. Including our current exchange, we have listed more than a dozen coins on OSL, which are all supported by sufficient legal opinions. For those who have done the argumentation, the different opinions between the various departments in the United States, or their own unilateral definitions in the end, will not affect the definition of the law in Hong Kong.
Reporter: Can these financial institutions or retail investors in mainland China invest in Hong Kong spot ETFs? Is there a possibility of opening up in the future?
Currently, qualified investors, institutional investors, retail investors and international investors who meet the requirements in Hong Kong can invest in cryptocurrency spot ETFs. At present, investors from mainland China are not allowed to invest in cryptocurrency spot ETFs in Hong Kong. For specific investor qualifications, you can consult brokers and sales channels, and continue to pay attention to whether there will be corresponding regulatory adjustments or specific regulatory frameworks in the future.
