On Tuesday, April 30, Hong Kong launched trading in the first ETFs to invest directly in Bitcoin and Ethereum. Crypto market analysts expect a surge in demand that could surpass the $125 million launch of Bitcoin ETFs in the US.
The launch of the crypto ETF in Hong Kong was the catalyst for the price of Bitcoin (BTC), which briefly surpassed $64,600. At the time of writing, BTC is trading at $63,543, up 1.46% in the last 24 hours.
Harvest Global Investments Ltd., the local unit of China Asset Management, as well as HashKey Capital Ltd. and Bosera Asset Management (International) Co., have spearheaded the introduction of Bitcoin and Ethereum ETFs into Hong Kong's financial landscape, according to CoinGape.
Rebecca Sin of Bloomberg Intelligence predicts that Hong Kong Bitcoin and Ether funds could raise a staggering $1 billion within two years. Meanwhile, Han Tongli, CEO of Harvest Global, takes a more optimistic view and believes that this estimate is too modest. He highlights the uniqueness of Hong Kong's financial ecosystem, which attracts investors from all over the world, unlike the US market, which is predominantly focused on Western investors.
In particular, the proposed ETFs in Hong Kong will operate on a subscription and redemption-in-kind mechanism, allowing the exchange of underlying assets for ETF shares, as opposed to the cash redemption model used in the US. This system allows for the seamless exchange of underlying assets into fund shares and vice versa, which compares favorably with global peers.
Brian Roberts, Head of Equity Product Development at Hong Kong Exchanges and Clearing Ltd., emphasized the exchange's openness to a wider range of crypto ETFs in an interview with Bloomberg: "We can continue with physical spot assets, possibly composite products, and eventually move into leverage and inverse strategies."
In doing so, he noted the importance of monitoring the performance of recent launches as a first step before exploring further opportunities in the future.
It is worth noting that ETF issuers in Hong Kong are not concerned that the US Securities and Exchange Commission (SEC) considers Ether (ETH) to be an unregistered security.
Wayne Huang, Head of Custody at OSL Digital Securities, said, "The US designation of Ethereum as a security will not affect the Hong Kong Securities Regulatory Commission's independent decision.
Huang believes that Hong Kong will be the first in the world to launch a spot ETF on Ethereum, as cryptocurrency regulation in the US is handled simultaneously by several departments that constantly contradict each other.
Many experts point out that the success of the launch of the crypto ETF depends on whether Hong Kong will be able to confirm its status as the largest regulated cryptocurrency hub in Asia.
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