Hong Kong’s financial regulator officially approved the issuance of the first spot ETFs based on Bitcoin and Ethereum. Trading is set to begin on April 30.

Hong Kong Approves Spot Bitcoin and Ethereum ETFs

Hong Kong’s Securities and Futures Commission (SFC) officially approved the issuance of spot Bitcoin and Ethereum ETFs from China Asset Management (ChinaAMC). The ChinaAMC Bitcoin ETF and ChinaAMC Ether ETF will begin trading on April 30 on the Hong Kong Stock Exchange (HKEX).

Thomas Zhu, Head of Digital Assets at ChinaAMC, said the approved exchange-traded funds will allow retail and institutional investors to invest more safely and conveniently in underlying digital assets within a regulated structure.

According to Bloomberg, among the first batch of spot crypto ETFs in Hong Kong, Harvest Global Investments’ Harvest Bitcoin Spot ETF and Harvest Ether Spot ETF, and the joint funds of HashKey Capital and Bosera Asset Management, Bosera Hashkey Bitcoin ETF and Bosera Hashkey Ether ETF, will also begin trading on April 30. A total of six funds will be launched.

Eric Balchunas, Analyst at Bloomberg, confirmed the information. According to his data, the commission for fund management was lower than expected — from 0.3% to 0.99%. Besides, unlike the operating model of spot Bitcoin ETFs in the U.S., with all transactions being carried out in dollars, crypto funds in Hong Kong allow the issuance of new ETF shares and redemption of existing ones using BTC and ETH in kind. This could create a more favorable environment for investors compared to U.S. funds.

Meanwhile, in the United States, the BlackRock iShares Bitcoin Trust (IBIT) fund saw zero inflows for the first time since its launch. The fund was launched on January 11, 2024, and since then recorded an inflow of investments for 71 days, until April 24. According to Farside Investors, IBIT attracted almost $15.5 billion during that time. The total inflow of funds into spot Bitcoin ETFs in the U.S. during that time amounted to about $12.3 billion, considering the outflow of almost $17 billion from the Grayscale Bitcoin Trust ETF (GBTC). By comparison, experts predict that the spot crypto ETF sector in Hong Kong could attract up to $1 billion in the first two years.

Many analysts associated the Bitcoin market success in Q1 2024 with increased demand for BTC from issuers of spot Bitcoin ETFs in the United States. Therefore, there are now opinions that the fading hype around financial assets is due to the recent halving on the Bitcoin blockchain.

Author: Evgeny Tarasov
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