Spot Bitcoin and Ethereum exchange-traded funds (ETFs) have started trading on the Hong Kong stock exchange, after much anticipation that another timezone will now be trading crypto ETFs albeit with lower optimism about the pace of inflows these funds will see.
Hong Kong-based asset managers China Asset Management, Harvest Global Investments, and a partnership between Bosera and Hashkey launched their funds on Tuesday, after receiving the green light from the country’s markets regulator earlier this month.
Although some industry watchers have considerably pared back expectations about the inflows these funds will receive, an executive at China Asset Management believes that spot crypto ETFs will see more than $125 million worth of capital inflows on day one.
“I am very confident that the initial listing scale of Hong Kong’s virtual asset spot ETF can exceed the issuance scale on the first day of the United States,” said Zhu Haokang, head of digital asset management at China Asset Management to Foresight News.
Haokang also explained that these spot crypto ETFs would differ from their US counterparts, in that they would allow physical redemptions. ETF distributions are typically set up this way so the fund does not need to sell securities to generate cash, and removes capital gains, while permitting non redeeming shareholders to defer taxes on their gains.
The physical subscription method would also allow Bitcoin miners to directly invest their holdings in these spot crypto ETFs. While the funds are off limits to investors from mainland China, they will be open to certain investors outside Hong Kong that meet the local regulatory requirements.
Perhaps the biggest difference of all, however, is the fact that a spot Ethereum ETF has been approved for trading — something that remains a distant possibility in the US at the moment considering the U.S. Securities and Exchange Commission’s (SEC) uncertain stance on whether ether is a security or not.
This won’t factor into the outlook for Ethereum ETFs in Hong Kong, according to China Asset Management executive Wayne Huang.
“…whether the United States defines Ethereum as a security does not affect the independent decision-making of the Hong Kong Securities Regulatory Commission,” said Huang to Foresight News.
“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.”
