Spot Ethereum ETF And Bitcoin ETF To Go Live On April 30 in Hong Kong
China’s leading asset managers are presently making the last preparations to begin trading by April 30 as Hong Kong speeds up its efforts to list the first batch of spot Bitcoin and Ethereum ETF. Asian cryptocurrency investors are undoubtedly excited about the launch, especially in light of the success of US spot Bitcoin ETFs, which amassed assets of over $56 billion in just three months of introduction.
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Competing With US Bitcoin ETFs
HashKey Capital and Bosera have announced that Hong Kong spot-ETFs will adopt an in-kind subscription and redemption mechanism. This allows the exchange of underlying assets for ETF units and vice versa, contrasting with the cash redemption model used by US funds.
Ethereum ETF And Bitcoin ETF
Market makers, digital asset exchanges, and cryptocurrency natives find the in-kind approach particularly appealing, according to Evgeny Gaevoy, co-founder of cryptocurrency liquidity provider Wintermute Trading Ltd. It provides more arbitrage opportunities and increased efficiency.
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The Bosera-HashKey Capital spot products will be live on April 30, according to a HashKey representative. Crypto-futures-based exchange-traded funds (ETFs) are already allowed in Hong Kong; three have been launched thus far: Samsung Bitcoin Futures, CSOP Ether Futures, and CSOP Bitcoin Futures. But their total assets are just about $175 million, far less than US products like the $2.5 billion ProShares Bitcoin Strategy ETF, which is based on derivatives.
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Ethereum ETF And Bitcoin ETF
The in-kind strategy appeals especially to market makers, digital asset exchanges, and crypto natives, according to Evgeny Gaevoy, co-founder of cryptocurrency liquidity provider Wintermute Trading Ltd. It provides more potential for arbitrage and increased efficiency.
According to a HashKey representative, trading for the Bosera-HashKey Capital spot products will start on April 30. Three crypto-futures-based exchange-traded funds (ETFs) have been listed in Hong Kong thus far: CSOP Bitcoin Futures, CSOP Ether Futures, and Samsung Bitcoin Futures. But with only about $175 million in total assets, they are far smaller than US products like the $2.5 billion ProShares Bitcoin Strategy ETF, which is based on derivatives.
Read also: Ethereum and Bitcoin ETFs Are Successfully Launched in Hong Kong
Chinese riches residing in the city as well as cryptocurrency exchanges and market makers functioning in the Asia-Pacific area are potential sources of demand. According to Rebecca Sin, an ETF analyst at Bloomberg Intelligence, the Hong Kong Bitcoin ETFs may only handle $1 billion in assets in two years.
Global interest has already been piqued in US-based Bitcoin funds from major players in the market like Fidelity Investments and BlackRock Inc. Conversely, Harvest Global and Bosera Asset Management, two potential issuers from Hong Kong, have not received the same level of attention. One Satoshi co-founder, Roger Li, stated: “Hong Kong lacks the ‘BlackRock’ effect to call upon.”
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:
Ethereum ETF And Bitcoin ETF
“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.”
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