Hong Kong Leads: The First Batch of Bitcoin and Ether Spot ETFs is About to Launch

After the approval of the Crypto Assets Spot ETF, a Hong Kong fund company has taken the lead in launching Bitcoin and Ether ETFs, which will be listed on the Hong Kong Stock Exchange on April 30, 2024. This marks Hong Kong as the second region in the world to approve such products after the United States, and it also means that ordinary investors can participate in digital asset-related investments by subscribing to the ETF.

The Hong Kong fund company has added digital asset management services based on its existing traditional asset management business, becoming the first approved institution among the leading fund companies' Hong Kong subsidiaries in China. Through an exclusive interview with the head of digital asset management at the company, we can learn about the latest developments in Hong Kong's digital asset sector.

Since the Hong Kong government released its policy declaration on the development of crypto assets in October 2022, Hong Kong has been actively promoting itself as a global Web 3.0 hub. In March of this year, the Hong Kong Monetary Authority launched three innovative sandbox projects covering wholesale Central Bank Digital Currency, stablecoins, and the second phase of the digital Hong Kong dollar pilot program. The upcoming Bitcoin and Ether Spot ETFs also highlight the Hong Kong government's support for the compliant development of the crypto asset ecosystem. The fund company is actively researching the crypto asset industry, particularly in product innovations such as the tokenization of physical assets and Bitcoin/Ether Spot ETFs, and is participating in the Monetary Authority's experimental sandbox projects.

Compared to the United States, the approach taken by Hong Kong regulators shows significant differences. Hong Kong allows cash and physical subscriptions, and participating traders can directly use Bitcoin or Ether to subscribe to or redeem ETF shares, while in the U.S. it can only be done with cash. Although the current market size of spot Bitcoin ETFs in the U.S. is larger, Hong Kong, as one of the first jurisdictions to approve spot Ethereum ETFs and allow retail participation, may have advantages.

The regulatory and licensing framework implemented in Hong Kong emphasizes strict compliance with anti-money laundering (AML) and know your customer (KYC) as well as know your token (KYT) standards. These regulations impose stringent obligations on all market participants to prevent illegal financial activities. In contrast, the regulatory oversight of crypto assets trading platforms and custodians in the United States is not complete.

Currently, qualified investors, institutional investors, retail investors, and compliant international investors in Hong Kong can invest in Crypto Assets ETF. Mainland Chinese investors are temporarily unable to invest in Hong Kong's Crypto Assets ETF. Specific investment qualifications can be consulted with brokers and sales channels, and attention should be paid to potential regulatory adjustments that may be introduced in the future.

Bitcoin has risen for 7 consecutive months, and investors should analyze digital asset investment from three perspectives: defense, diversification, and decision-making. As a decentralized digital currency, Bitcoin performs well during times of risk aversion and has a low correlation with traditional assets, allowing for portfolio diversification. In the long term, Bitcoin's investment performance surpasses that of other major asset classes.

However, investing in digital assets also carries various risks, such as concentration risk, industry risk, speculative risk, extreme price volatility risk, and regulatory risk. Investors should make cautious decisions based on their own investment goals and risk tolerance.

The Hong Kong fund company has rich experience in ETF management and is a leader in both the Chinese and Hong Kong markets. They manage several of the largest ETF products globally or in Hong Kong, with a strong team and extensive operational experience. For innovative products like Spot Bitcoin and Ether ETFs, they are confident that their strong team capabilities, rich management experience, and brand influence will meet market expectations.