A major moment in Hong Kong's financial history: Bitcoin ETF officially landed on the Hong Kong Stock Exchange

Original author: Carbon Chain Value

Original source: Carbon Chain Value

On April 30, Hong Kong Bitcoin spot ETF and Ethereum spot ETF will officially land on the Hong Kong Stock Exchange. ushered in the first trading day.

Previously, according to a report by the Financial Associated Press, China AMC Fund (Hong Kong), Harvest International, and Bosera International announced that the first batch of Hong Kong Bitcoin spot ETF and Ethereum spot ETF products applied for by the three fund subsidiaries have been approved by the Hong Kong Securities and Futures Commission, and are planned to be issued on April 29 and listed on the Hong Kong Stock Exchange on April 30.

This is the first time of its kind in the Asian market, and they are designed to provide investment returns that closely match the spot prices of Bitcoin and Ether (before fees and expenses). From the perspective of the industry, the issuance of spot Bitcoin and Ether ETFs in Asia provides retail and institutional investors with a safe, efficient and convenient tool to allocate digital assets.

The move was hailed as a major moment in Hong Kong's financial history.

Yesterday, ChinaAMC (Hong Kong) Limited held a press briefing on "Asia Initial Offering - Spot ChinaAMC Bitcoin ETF and Spot ChinaAMC Ether ETF". The following questions were answered by Howard Chu, Head of Digital Asset Management and Head of Family Wealth at ChinaAMC (Hong Kong), and Wayne Huang, Head of ETF & Custody at OSL.

Chu Haokang, head of digital asset management and head of family wealth at ChinaAMC (Hong Kong), said that he is very confident that the initial listing size of Hong Kong's virtual asset spot ETF (more than US$125 million) will exceed the size of the first day of issuance in the United States. The 10 U.S. Bitcoin spot ETF issuers issued $125 million on the first day of January 10 this year. ChinaAMC is confident that it will become the largest ETF issuer among the three issuers, and the mystery can be revealed to you at 9:30 a.m. today.

Here's what you want to know about the Q& Compiled live by Foresight News. FYI.

Q: What is ChinaAMC(HK)'s view on the inflow of funds into the first day of listing and trading of the Hong Kong Crypto ETF tomorrow?

Chu Haokang: We are very confident that the initial offering size of Hong Kong virtual asset spot ETFs (more than US$125 million) will exceed the size of the first day of issuance in the United States, and the size of the 10 US Bitcoin spot ETF issuers in the United States on the first day of issuance on January 10 this year was US$125 million. ChinaAMC is confident that it will become the largest ETF issuer among the three issuers, and the mystery can be revealed tomorrow morning at 9:30 a.m.

Wayne Huang: There will be an announcement from the HKEX at 9:30 a.m. tomorrow morning, but OSL does have completed the first day of fundraising transactions at OSL with two funds (including ChinaAMC and another fund that we work with) today, and we are looking at the numbers to far exceed the inflow of funds from the first day of listing and trading of US Bitcoin spot ETFs.

Q: What is the difference between Spot ChinaAMC Bitcoin ETF and Spot ChinaAMC Ether ETF and other ETFs?

Zhu Haokang: The first difference is that compared with the US spot bitcoin ETF, we have spot and physical subscription and redemption, which the US spot bitcoin ETF does not have.

In addition, ChinaAMC's products differ from the other two in two ways: ChinaAMC's Hong Kong spot ETF is the only ETF with HKD, USD and RMB counters. The second is that in addition to the listed shares, we have unlisted shares. Both of these are things that the other two don't have.

Q: Apart from Hong Kong, where else are investors participating in Hong Kong virtual asset spot ETFs?

Zhu Haokang: Thanks to the physical subscription method, first of all, investors include bitcoin mining farms, etc., and they can use their bitcoin holdings to directly buy virtual asset spot ETFs in Hong Kong. Secondly, in countries and regions outside Hong Kong that have not yet issued ETFs, such as Singapore and the Middle East, we have also reached out to a large number of highly interested investors. In addition, despite the current size of the spot Bitcoin ETF market in the US, Hong Kong's cash and physical subscriptions compared to the US, and the fact that it is open for trading during the Asian trading session, will still attract many US investors. Finally, a number of family offices in Asia and overseas are also very interested in spot crypto ETFs.

Q: Is there currently only one brokerage firm in Shengli Securities that is qualified to conduct relevant transactions in the physical subscription?

Wayne Huang: Not only Shengli Securities can do physical subscription, but also Huaying Securities with the support of OSL, there are currently three brokerages that can do physical subscription, and there will be more follow-up later. Therefore, after the ETF is listed tomorrow, many brokerages will follow up, and it is possible that more brokerages will participate in the entire ecosystem of virtual asset ETFs in May.

Q: What is the specific operation of physical subscription?

Wayne Huang: Physical subscription is a pioneering initiative that distinguishes Hong Kong ETFs from US ETFs, first of all, the brokerage company needs to upgrade the No. 1 license, which can handle virtual asset transactions, and investors can transfer the coins to OSL through this brokerage, and then finally transfer the equity to the fund's custodian account to complete the whole process of physical subscription.

Q: What is OSL's anti-money laundering process in physical subscriptions, and is it acceptable that the counterparty is the wallet of the counterparty's exchange?

Wayne Huang: First of all, the investor must connect to OSL through a brokerage to open an account, and we will do a whitelist verification of the wallet that is about to be minted, to prove that the wallet is owned and controlled by the investor, and secondly, we will do a certain screening of the investor's private wallet to see if there are some suspicious transactions in the past dozens of transactions on the chain, and the wallet that has passed the whitelist verification can let him send money in.

Theoretically, this can be done, if the anti-money laundering rules of the other exchange are consistent with the rules of OSL, we can accept the other party to send coins, but the other exchange needs to provide certain customer information.

Q: Can Hong Kong's crypto spot ETF be opened to mainland investors, or is there a possibility that it will be opened to mainland investors in the future?

Zhu Haokang: At present, Chinese mainland investors are not allowed to invest in Hong Kong's cryptocurrency spot ETFs, and Hong Kong qualified investors, institutional investors, retail investors and international investors who meet the requirements can invest in cryptocurrency spot ETFs. Specifically, you can consult securities firms and sales channels, and continue to pay attention to whether there are corresponding regulatory adjustments or specific regulatory frameworks in the future.

Q: Hong Kong's Ethereum spot ETF is the first in the world, but if the U.S. finally decides that "Ethereum" is a security, will it affect Hong Kong's Ethereum spot ETF?

Wayne Huang: Probably not, because whether or not the U.S. defines Ethereum as a security does not affect an independent decision of the Hong Kong Securities and Futures Commission. The SFC has its own process for determining whether a virtual asset is a security and whether it is open to retail traders, and will not affect the legal definition in Hong Kong due to differences of opinion among various departments in the United States, or ultimately their own unilateral definitions.

I would also like to emphasize why Hong Kong was the first in the world to launch an Ethereum spot ETF, and not the United States, which has multiple departments speaking out at the same time or trying to regulate cryptocurrencies. Hong Kong's regulation of cryptocurrencies has long been decided, that is, the Securities Regulatory Commission to supervise, the Securities Regulatory Commission has given a very clear regulatory framework, Hong Kong has long had a clear definition of Ethereum, Ethereum is not a security, but the first non-securities virtual assets to be included in Hong Kong's supervision together with Bitcoin, and is one of the two targets that can be provided to retail investors.

Q: Will there be ETFs for other virtual assets in Hong Kong?

Wayne Huang: For the time being, there are only Bitcoin and Ethereum. We have repeatedly discussed with the CSRC how to list the process of Hong Kong compliant trading, I will briefly share, first of all, we need the issuer of the virtual asset or we ourselves to find a legal opinion, explaining whether the currency is a security or non-security, and the legal opinion and our due diligence on the currency into a detailed research report submitted to the CSRC, and then finally after the approval of the CSRC, it will be opened to professional investors first, when it reaches a certain liquidity and is included in the scope of an index for a period of time, we can apply to the CSRC to upgrade the currency to be able to be traded by retail investors。

But so far, after 4 years of operation, only two assets, Bitcoin and Ethereum, can be opened to retail investors, that is, for the time being, only these two coins are eligible to launch ETFs, but we have been discussing and researching with the Securities and Futures Commission.

Q: Will you consider launching ETFs with inverse leverage for virtual assets?

Zhu Haokang: ETFs themselves are full of financial attributes, which involve the innovation of many financial products, and we have also seen some international investment banks do some financial innovations and similar derivatives development on existing US products. We are also closely monitoring and communicating with a large number of investment banks and brokerages. To take a simple example, the Hong Kong Stock Exchange has also allowed ETFs to be shorted, or even margin trading, and we are also communicating with our partners to create more income and more financial product innovation for our ETF investors.

Q: How do you see the next crypto ETF affecting the price of cryptocurrency?

Zhu Haokang: Based on a variety of factors, we believe that crypto ETFs will be positive for crypto prices. First, Hong Kong's crypto spot ETF market injects more liquidity into the crypto market. Second, accelerate the compliance of the industry. Third, we have expanded funding channels. Fourth, investors may get arbitrage opportunities between the ETF price and the spot price, so that more market makers and arbitrage investors can actively participate. Fifth, with the passage of our crypto spot ETF, the trading factors of the traditional market will also directly affect the crypto market. Sixth, we believe that Hong Kong's regulatory framework is relatively clear, and the issuance of Bitcoin and Ether ETF products provides great convenience. Seventh, we believe that Hong Kong, as an international financial centre, will be more attractive to Chinese investors to trade during Asian hours, improve market liquidity, and perform better than similar products in Europe or Canada.

Q: ChinaAMC's rates are higher than those of the other two Hong Kong companies, are you worried about the lack of competitiveness?

Zhu Haokang: I think people are more concerned about the issue of fees, first of all, the fee structure of ChinaAMC Hong Kong fully follows the standards of thematic and complex ETFs listed in Hong Kong, you can refer to the fees and charges of cryptocurrencies, futures ETFs and various thematic ETFs listed in the past. Our fees are lower than those of the same type. Secondly, our products provide a very high degree of flexibility in terms of trading options, which not only supports both listed and unlisted shares, but also supports all three types of counter trading: USD, HKD and RMB, which is our unique advantage. Third, the complexity and innovation of our products determine the importance of our risk management and operational stability.