Bitcoin spot ETF approved

The first batch of Bitcoin spot ETFs and ETH spot ETFs in the Asian market will be listed soon!

ChinaAMC Fund (Hong Kong), Bosera Fund (International), Harvest International's Bitcoin ETF and Ether ETF were approved in Hong Kong today, and are scheduled to be issued on April 29 and listed on the Hong Kong Stock Exchange on April 30.

The first batch of Bitcoin spot ETFs were approved by the Hong Kong Securities and Futures Commission

The rates of the above three products are also disclosed simultaneously. Among them, Harvest International's products will be charged a 0.3% management fee and the management fee will be reduced within 6 months of holding, Bosera Fund (International) will charge a 0.6% management fee and the management fee will be reduced within 4 months after issuance, and ChinaAMC Fund (Hong Kong) will be charged 0.99% management fee for holding its products.

It is reported that the first batch of Bitcoin spot ETFs and Ether spot ETFs have introduced a crypto subscription mechanism (that is, investors are allowed to directly use Bitcoin and Ether to subscribe for corresponding ETF shares). In the eyes of industry insiders, as the first batch of ETFs in Asia that can be directly subscribed with the corresponding cryptocurrencies, the launch of these products provides a new way of asset class investment, which not only lowers the threshold for participation, but also enhances investment flexibility and market transparency by providing physical subscription and redemption options, which is expected to further promote the development of the virtual asset market in Hong Kong and even the whole of Asia, and attract more global capital inflows.

Bosera Fund (International) Co., Ltd. said that this historic approval not only provides Asian investors with a new investment option, but also marks a solid step forward for Hong Kong on the road to establishing an international virtual asset financial center.

In an interview with a reporter from the Securities Times, a market participant said that the approval of the Bitcoin spot ETF means that investors can purchase virtual asset financial products through their securities accounts, which lowers the transaction threshold;

Hedy, chief researcher of Ouke Cloud Chain Research Institute, said in an interview with the Securities Times reporter that Hong Kong people's enthusiasm for Bitcoin is particularly high, and Hong Kong's virtual asset market as of January this year, there are at least 200 physical encrypted OTC exchange shops (exchange shops), according to estimates, the average annual transaction volume of the money changer is more than 10 billion US dollars. Before the ETF channel was not available, Chainalysis also estimated the Hong Kong market: although the population of Hong Kong is much smaller than that of the United States, the city's active OTC crypto market drove $64 billion in trading volume during the previous bear market (June 2022 to June 2023). Compared to the rest of Asia, Hong Kong dominates large institutional cryptocurrency trading. 46.8% of the annual virtual asset transactions in Hong Kong are institutional transactions of more than US$10 million, which is higher than the global average for similar transactions.

Hong Kong continues to promote the participation of the industry in the construction of the Web3 ecosystem

In the emerging virtual asset development ecosystem, Huobi Global website shows that the price of Bitcoin has increased by 200% in the past year, and the rising asset scale has also made the trading and management value of this asset increasingly important. The listing of Bitcoin spot ETF marks a new stage for virtual assets to enter the traditional financial market, and also provides investors and financial institutions with more ways to participate in the digital asset market.

In fact, as early as 16 December 2022, two virtual asset futures ETFs were listed on the Hong Kong Stock Exchange – CSOP Bitcoin Futures ETF (stock code: 3066) and CSOP Ether Futures ETF (stock code: 3068) managed by CSOP Asset Management Limited to track standardised, cash-settled Bitcoin futures contracts and Ether futures contracts traded on the Chicago Mercantile Exchange (CME Group) respectively. In January 2023, a third virtual asset ETF was listed on the Hong Kong market, bringing the total number of Bitcoin futures ETFs and one Ether futures ETF to the market.

HKEX became the first exchange in Asia to offer crypto-asset ETF products, providing Asian investors with the opportunity to participate in virtual asset investment. The launch of the first batch of virtual asset ETFs is an important milestone for Hong Kong's virtual asset ecosystem, meaning that for the first time, global investors can tap into the world of virtual assets in a regulated environment in the Asian time zone.

With the Bitcoin spot ETF about to land in the Hong Kong market, how to do a good job in the regulation of virtual assets has also become a core concern of the industry. On 22 December 2023, the SFC issued the Joint Circular on Virtual Asset-related Activities of Intermediaries and the Circular on Investment in Virtual Assets by SFC-authorised funds. Among them, the previous circular clarified the risks of tokenization of securities, as well as the intermediary activities that intermediaries need to be regulated, including management, distribution, trading, advisory, etc.

The latter circular states that the regulator is ready to accept applications for authorisation of other funds involving virtual assets, including virtual asset spot ETFs, and sets out the requirements to be applied by intermediaries in the distribution of VA-related products and the standards of conduct to be met in the distribution of approved funds.

In addition, the SFC has published a number of lists of virtual asset trading platforms to ensure that information about virtual asset trading platforms is disseminated in a clear, transparent and timely manner. Among them, the "List of Licensed Virtual Asset Trading Platforms" lists the names of virtual asset trading platform operators duly licensed by the SFC, and currently only two crypto platforms have been approved by the SFC – OSL Digital Securities Limited and Hash Blockchain Limited.

At the "2024 Hong Kong Web3 Carnival" held in Hong Kong on April 6, some Hong Kong regulators publicly stated that they will continue to promote more industry participation, and promote the sound and responsible development of the virtual market through a multi-pronged approach such as timely information dissemination and comprehensive public education. He said that at present, more than 220 Web3.0-related companies from more than 20 regions such as the Mainland, Europe and the United States have set up offices in Hong Kong, including virtual asset exchanges, blockchain infrastructure companies, blockchain network security companies, virtual currency wallets and payment companies, and will strike a balance between promoting development and appropriate regulation, especially in the field of virtual assets, a comprehensive and clear regulatory system is the key to promoting their sustainable development.

Hedy said that Hong Kong's layout of Web3 and the opening of the more well-known ETF channel are more meaningful, which is not only a positive adjustment for the balance sheets of financial institutions due to the "shrinkage" of overall assets, but also a strategic strategy to stay at the "table" or even form a new financial table. With the favorable fundamentals such as the halving of bitcoin, the virtual asset spot ETF approved by Hong Kong has unlimited potential in the future.

Editor-in-charge: Li Dan

Proofreading: Yang Lilin

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