Hong Kong launches Ethereum and Bitcoin spot ETFs

Hong Kong launches Ethereum and Bitcoin spot ETFs

Trading of spot ETFs on Ethereum and Bitcoin will begin in Hong Kong on April 30, as announced by regulators Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA). Unlike the US, where the Securities and Exchange Commission (SEC) approved Bitcoin spot ETFs, a decision regarding Ethereum spot ETFs is still awaited. The SFC conditionally approved the first ETH and BTC spot ETFs in Hong Kong on April 15th, with trading scheduled to begin on April 30th. Harvest Global Investments, China Asset Management, HashKey and Bosera Asset Management are all set to offer crypto spot ETFs in Hong Kong.

In Hong Kong, spot ETFs are launched as real assets on Bitcoin and Ethereum, in contrast to the redemption model of US ETFs. This makes it possible to create new ETF shares in Hong Kong not only with cash, but also to purchase them with the underlying assets Bitcoin and Ether. This approach offers efficiency and liquidity advantages, as crypto expert Colin Wu points out. The model is seen as attractive to crypto natives, market makers and digital exchanges as it offers arbitrage opportunities and efficiencies.

The approval of Bitcoin spot ETFs in the US provided a boost to the crypto market at the beginning of the year. The spot ETFs in Hong Kong are now expected to attract strong interest and provide further support to the market. Analysts predict $1 billion in assets under management in Asian spot ETFs within two years. Despite the positive outlook, experts warn against overestimating demand as Asian suppliers are less well-known and Hong Kong does not have the same capital strength as the US. There is talk of setting realistic expectations for the Hong Kong ETF market, particularly given the modest size of futures ETFs in the region to date.