Bitcoin, Ethereum spot ETFs start trading in Hong Kong with high expectations

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Hong Kong-listed spot Bitcoin and Ethereum exchange-traded funds (ETFs) are set to debut in a few minutes. In anticipation of the launch, Zhu Haokang, Digital Asset Management Director and Family Wealth Director at China Asset Management, is confident that the launch scale of Hong Kong’s virtual asset spot ETFs will exceed the US’s initial $125 million scale.

“I am very confident that the initial listing scale of Hong Kong’s virtual asset spot ETF (more than US$125 million) can exceed the issuance scale on the first day of the United States,” Haokang said in a press briefing.

Haokang confirmed that mainland Chinese investors are barred from participating in these ETFs, while Hong Kong’s qualified investors, institutional investors, retail investors, and international investors who comply with the regulations have the green light.

He also noted that the ETFs have garnered significant global interest, especially from regions like Singapore and the Middle East that lack similar offerings. The physical subscription method allows Bitcoin miners to invest directly using their Bitcoin holdings.

Wayne Huang of OSL clarified that Ethereum’s potential classification as a security in the US would not impact Hong Kong crypto ETFs due to the independent regulatory processes of the Hong Kong Securities and Futures Commission (SFC).

Hong Kong is able to launch the world’s first spot Ethereum ETF because the SFC has already defined its regulatory framework clearly, considering Ethereum as a non-security virtual asset, Huang added.

“Hong Kong has already had a clear definition of Ethereum. Ethereum It is not a security, but the first non-securities virtual asset to be included in Hong Kong supervision together with Bitcoin, and it is one of the two targets that can be provided to retail investors,” Huang said.

Additionally, he reported that discussions are ongoing to expand the range of virtual assets available in Hong Kong’s ETF market.

The launch is anticipated to have a positive effect on crypto prices by increasing liquidity, encouraging regulatory compliance, and opening new capital channels.

Commenting on the upcoming debut of Bitcoin and Ethereum ETFs in Hong Kong, Bloomberg ETF analyst Eric Balchunas suggests that this will be an opportunity to compare demand and investment flows into Ethereum ETFs against Bitcoin ETFs directly.

He estimates that Ethereum might capture 10% or less of net flows compared to Bitcoin.

Note also that this is the first time we will get clean look at how popular Eth is relative to btc in ETF format. What % of the net flows do you think they will grab? I think 10% or less, James more optimistic. https://t.co/ZKggtAGQIH

— Eric Balchunas (@EricBalchunas) April 29, 2024

Previously, Balchunas said the launch’s impact will likely be minor compared to that of the US market, considering the nascent state of Hong Kong’s ETF market, which currently holds only $50 billion in assets, as well as other factors like fee structures and China investors’ restrictions.

However, he sees the Hong Kong-listed crypto ETFs as a long-term positive for Bitcoin adoption.

Bitcoin’s price has climbed over the past few hours. It’s currently trading at $64,000, up over 1.5% after dipping below $62,000 earlier today, according to CoinGecko.

Meanwhile, Ethereum is hovering around $3,200, down 1.4% in the last 24 hours.

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