Original author: Bitke
Original source: Koala Finance
April 30 will be the day when Hong Kong's virtual asset market will witness history.
Koala Finance understands that the Hong Kong Stock Exchange has confirmed that the first batch of virtual asset spot ETFs in Asia will be listed on April 30, opening up new areas of investment.
Bosera HashKey, ChinaAMC and Harvest were included as HKSAS Multi-Counter Eligible Securities
On 26 April, HKEX issued three notices announcing the acceptance of Bosera HashKey Bitcoin ETF Shares and Bosera HashKey Ether ETF Shares, ChinaAMC Bitcoin ETF Shares and ChinaAMC Ether ETF Shares, as well as Harvest Bitcoin Spot ETF Shares and Harvest Ether Spot ETF Shares as CCASS Multi-counter Eligible Securities. It is reported that:
1. The trading unit of Bosera HashKey Bitcoin ETF shares and Bosera HashKey Ether ETF shares is 10 shares, and the trading currencies are HKD and USD; investors who subscribe to Bosera HashKey Spot Bitcoin ETF need to have a brokerage account, submit a "share creation instruction" through the broker on T day, and deposit cash/coins into the account at the same time, wait for the Hong Kong Central Computing Institute (HKSCC) to create ETF shares, and receive ETF shares in T+2 days. At the time of redemption, investors can choose to sell in the primary/secondary market, if they are redeemed in the primary market, they need to submit a "share redemption order" through the broker on T day, and after HKSCC revokes the ETF shares, the cash redemption will be received on T+3 day, and the physical redemption will be received immediately on T+0 day.
2. The trading unit of Harvest Bitcoin Spot ETF shares and Harvest Ether Spot ETF shares is 100 shares, and the trading currencies are HKD and USD;
3. The trading unit of ChinaAMC Bitcoin ETF shares and ChinaAMC Ether ETF shares is 100 shares, and the trading currencies are Hong Kong dollars, US dollars and RMB.
The above ETFs are expected to commence listing and trading on The Stock Exchange of Hong Kong Limited on 30 April 2024 and will be included in the CCASS Multi-Counter Eligible Securities (as defined in the General Rules of HKSCC) on that date.
This time, the virtual asset spot ETF launched the world's first physical subscription and redemption mechanism, which provides investors with strong trading flexibility and the possibility for global investors to explore new digital asset investment channels.
How does the physical redemption mechanism of Hong Kong virtual asset spot ETF work?
The physical subscription and redemption mechanism of virtual asset spot ETFs is an innovative trading method that provides investors with more flexible options. Here's how it works:
1、申购（Creation）：
- Investors buy a certain number of ETF shares through a broker or exchange.
- After receiving a subscription request, the ETF manager will purchase the corresponding amount of virtual assets (such as Bitcoin or Ethereum).
- Virtual assets are held in a dedicated escrow account as a backing asset for ETF shares.
2、赎回（Redemption）：
- Investors can redeem ETF shares at any time.
- The ETF manager will transfer the corresponding amount of virtual assets to investors according to the redemption request.
- Redeemed virtual assets can be used directly for trading or holding.
3. Physical delivery:
- The physical redemption mechanism means that there is a one-to-one correspondence between the ETF shares and the actual virtual assets.
- When an investor subscribes or redeems ETF shares, the ETF manager will buy or sell the corresponding amount of virtual assets according to the market price.
- This mechanism ensures that the net value of the ETF shares is aligned with the value of the actual virtual asset.
The physical redemption mechanism of Hong Kong virtual asset spot ETFs allows investors to directly hold virtual assets, avoiding the risks associated with derivatives such as futures contracts. At the same time, the in-kind redemption mechanism improves the liquidity of ETFs, making it easier for investors to buy or sell shares. It is important to note that the in-kind redemption mechanism may be affected by market volatility and liquidity. Investors should carefully consider market risks when using this mechanism and make choices based on their own needs.
What is the impact and significance of the listing of spot virtual asset ETFs in Hong Kong?
In fact, the historic launch of a spot virtual asset ETF in Hong Kong could have a multifaceted impact on the virtual asset market:
1. Increased market liquidity: The launch of virtual asset spot ETFs will provide investors with more convenient trading channels, which is expected to attract more funds to flow into the virtual asset market, thereby increasing market liquidity.
2. Diversified choices for investors: The listing of spot bitcoin and spot ether ETFs provides investors with diversified investment options. This helps to reduce risk for investors while also facilitating the development of the virtual asset market.
3. Increasing international recognition: The launch of a virtual asset spot ETF for the first time in the Asian market signifies Hong Kong's status and influence in the field of virtual assets. This is expected to attract the attention of more international investors and enhance the international recognition of virtual assets.
4. Innovation and physical subscription and redemption mechanism: The virtual asset spot ETF adopts the world's first physical subscription and redemption mechanism, providing investors with a more flexible trading method. This innovative mechanism may influence the design and development of other virtual asset products.
5. Changes in the regulatory environment: The approval of virtual asset spot ETFs may cause regulators to pay more attention to the virtual asset market. Changes in the regulatory environment may affect the development of the virtual asset market and investor confidence.
Overall, this move is expected to have a positive impact on the virtual asset market, but it is also necessary to pay close attention to market changes and regulatory policy adjustments.
summary
Koala Finance understands that holding spot virtual assets can directly reflect the performance of the relevant virtual assets, and the investment scope is limited to virtual assets (currently only Bitcoin and Ether) provided to the public in Hong Kong on a virtual asset trading platform licensed by the Securities and Futures Commission in Hong Kong, and the counterparty must trade virtual assets through a licensed virtual asset trading platform to reduce counterparty risk. Asset custody is required to entrust the custody of virtual assets to a designated institution regulated in Hong Kong, such as a licensed virtual asset trading platform, a bank or its Hong Kong-incorporated subsidiary, to reduce custody risks.
Investors can buy and sell virtual asset spot ETFs through brokerages or banks, and some virtual asset spot ETFs also offer unlisted unit classes, which operate very similarly to unlisted funds, and investors can subscribe and redeem them through securities banks or banks. When considering these products, it is important to do your homework, understand the features, operation and risks of the products in detail, and carefully consider your own risk tolerance.