Hong Kong virtual asset spot ETF has been approved in principle, and a number of public offering subsidiaries have entered the market

Hong Kong virtual asset spot ETF has been approved in principle, and a number of public offering subsidiaries have entered the market

Source of this article: Times Finance Author: Jin Zixin

There has been a new development in the market's long-rumored spot Bitcoin and Ether ETFs.

On April 15, Times Finance learned that the Hong Kong subsidiaries of Harvest Fund, Bosera Fund and China Asset Management were approved in principle by the Hong Kong Securities and Futures Commission to issue virtual asset spot ETF products. It is understood that the varieties issued include not only Bitcoin, but also Ether.

Hong Kong virtual asset spot ETF has been approved in principle, and a number of public offering subsidiaries have entered the market

Source: Picture Worm Creative

This year, overseas cryptocurrency-related ETFs have made great strides. On January 10, local time in the United States, the U.S. Securities and Exchange Commission (SEC) announced that it had approved the listing of the first batch of 11 spot bitcoin exchange funds (i.e., "spot bitcoin ETFs"), including products from 11 asset management institutions such as BlackRock, Ark Investment, Fidelity, Invesco, and Ark Investment, and the above approved ETF products have begun official trading on January 11, local time. However, Ether-related ETFs have not yet been approved by the SEC for issuance.

Judging from the current data, overseas bitcoin spot ETFs are favored by funds, and the inflow of funds is obvious. BlackRock's Bitcoin spot ETF, the world's largest asset management company, has attracted nearly $15 billion in three months since its listing on January 11.

The Hong Kong subsidiary of the mutual fund focuses on virtual assets ETF

Following the listing and trading of overseas bitcoin spot ETFs, the Hong Kong subsidiaries of domestic public funds have also begun to make efforts.

On April 15, Times Finance learned from ChinaAMC that ChinaAMC Fund (Hong Kong) has been approved by the Hong Kong Securities and Futures Commission to provide virtual asset management services to investors, and now plans to issue ETF products that can invest in spot Bitcoin and spot Ether.

It is understood that ChinaAMC (Hong Kong) will work with virtual asset industry partner OSL Digital Securities Limited (hereinafter referred to as "OSL Digital Securities") and the custodian BOCI UK Prudential Trust Limited to actively study and deploy.

Not only that, Bosera International and Harvest International have also obtained the approval in principle from the Hong Kong Securities and Futures Commission to issue relevant virtual currency ETF products, but the specific product landing time.

An industry insider said, "Generally speaking, it will take time to prepare and arrange after the approval in principle, and it will take some time before the official release." ”

After ten years of exploration and discussion, the development of overseas bitcoin spot ETFs is also in full swing.

According to BlackRock's quarterly report for the first quarter of this year, its assets under management broke through a record record of $10.5 trillion, an increase of about $1.4 trillion or 15% from the first quarter of last year. It is worth noting that BlackRock's net inflow in the first quarter reached $76.4 billion, accounting for 40% of the net inflow last year, of which $67 billion flowed into BlackRock's ETFs.

Hong Kong virtual asset spot ETF has been approved in principle, and a number of public offering subsidiaries have entered the market

Screenshot source: BlackRock Q1 report

It is understood that since its listing on January 11, the Bitcoin spot ETF has attracted nearly $15 billion in inflows in just three months, becoming the highlight of this year's performance.

OSL Group (00863.HK), which will cooperate with ChinaAMC (Hong Kong) to promote a new era of digital asset investment, also announced on the afternoon of April 15 that "its wholly-owned subsidiary and the digital asset trading platform OSL Digital Securities, which holds the license of the Hong Kong Securities and Futures Commission, has become the first virtual asset trading and virtual asset custody partner of ChinaAMC (Hong Kong), and will provide support for its first spot Bitcoin and Ether exchange-traded fund (ETF) in Hong Kong." ”

The price of Bitcoin is volatile, and institutions: investing through ETFs is more stable

In fact, Hong Kong's layout of virtual asset ETFs has long been traced.

On 22 December 2023, the Hong Kong Securities and Futures Commission (SFC) issued the Joint Circular on Virtual Asset-related Activities of Intermediaries and the Circular on SFC-Authorised Funds Investing in Virtual Assets, and announced that it was "ready to accept applications for authorization of funds such as virtual asset spot ETFs" and intended to make Hong Kong the first region in Asia to accept the listing of crypto-asset spot ETFs such as Bitcoin and Ethereum.

"The Hong Kong subsidiaries of the three leading public fund companies can be said to be the first batch of companies to eat crabs, and the industry is also looking forward to it," the above-mentioned industry insiders told Times Finance.

Regarding the difference between investing directly in Bitcoin and investing in Bitcoin spot ETFs, some institutions suggest that Bitcoin spot ETFs are more recommended from multiple perspectives.

Soochow Securities once analyzed in the research report, "From the perspective of transaction costs, convenience, liquidity, security, etc., we compared the relevant targets of overseas bitcoin investment, including the primary market (i.e., direct trading of bitcoin or bitcoin futures) and the secondary market (i.e., bitcoin spot ETF and bitcoin futures ETF), and the conclusion is that the secondary market is safer than the primary market, the transaction cost is lower, and the portfolio management is more convenient, among which, the bitcoin spot ETF has a lower rate than the futures ETF." ”

Guosheng Securities' blockchain team said that the existing bitcoin investment products have problems such as high fees, low liquidity and tracking error, and more importantly, these products still have compliance and convenience problems for traditional investor groups with stronger funds, not to mention that managing bitcoin in person also involves administrative burdens such as wallets, private key management, self-custody and tax declarations. Therefore, the blockchain team of Guosheng Securities believes that "Bitcoin spot ETF will be a more ideal investment tool." ”

As stated by the above-mentioned institutions, investing directly in Bitcoin is more risky.

On April 14, the price of bitcoin flashed crash again, falling by more than 7% in 24 hours, once falling below the $60,000 per coin mark, and only one day before (April 13), the virtual currency market had just suffered a heavy setback.

In the early morning of April 14, Bitcoin suffered a large-scale sell-off, and the price quickly fell to a low of $59,968 per coin, and then briefly recovered, but at 11 a.m., it staged a huge fall again.

Coinglass data shows that in this round of price fluctuations, a total of 258,000 people in the virtual currency market were liquidated, with a total amount of 966 million US dollars (about 6.99 billion yuan), of which 787 million US dollars were liquidated by long orders and 179 million US dollars were liquidated by short orders.

JPMorgan's report states that the Bitcoin "halving" event could have a serious negative impact on the profitability of Bitcoin miners. According to the report, the price of bitcoin could plummet to $42,000 per coin, which is more than 36% from the current potential downside.

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