Hong Kong Bitcoin and Ethereum ETFs, a new set of exchange-traded funds (ETFs), are set to launch on April 30, 2024, marking a noteworthy advancement in the cryptocurrency market. Three major issuers, namely ChinaAMC, Harvest Global, and a collaboration between HashKey Capital and Bosera Asset Management will be launching their spot Bitcoin and Ethereum ETFs on the same day.
One of these issuers has revealed more information about ETF structures. ChinaAMC reveals that its ETFs will track indexes provided by the Chicago Mercantile Exchange (CME), offering a unique perspective on cryptocurrency markets.
The unique aspect of these Hong Kong Bitcoin and Ethereum ETFs, compared to their US counterparts, lies in their redemption options. Investors will have the flexibility to redeem their holdings for fiat currencies such as USD, HKD, or CNY, or choose to receive Bitcoin or Ethereum directly. This dual redemption mechanism offers investors increased choice and flexibility.
Moreover, subscription to Hong Kong Bitcoin and Ethereum ETFs will be possible using Bitcoin or Ether directly, a unique feature not commonly seen in traditional ETF offerings. The custody of these ETFs will be managed by two prominent financial institutions, BOCI-Prudential and OSL, entrusted with safeguarding the assets of two major ETF issuers, ChinaAMC and Harvest Global.
The ETF issuers are planning to levy management fees ranging from 0.3% to 0.99% for their respective ETFs. According to Bloomberg analyst Eric Balchunas, ChinaAMC is proposing the highest fee at 0.99%, followed by Bosera at 0.60%. Meanwhile, Harvest Global is offering the lowest rate at 0.0%, with plans to increase it to 0.3% after 6 months. These fees are slightly above those of comparable ETFs in the United States. However, this higher fee structure could indicate the enhanced value and services provided by these ETFs.
Trading for these ETFs will take place on regulated cryptocurrency exchanges in Hong Kong, such as OSL and HashKey. Moreover, redemption deadlines have been set at 11:00 AM for cash redemption and 4:00 PM for cryptocurrency redemption, ensuring clarity and effectiveness in the redemption process.
To ensure smooth trading and adequate liquidity, market makers like Vivienne Court and Virtu Financial will actively participate in the trading process. Their involvement is anticipated to bolster market stability and facilitate efficient price determination.
These ETFs are designed to provide investors with a more precise reflection of real-time cryptocurrency values, which could attract global investment to Hong Kong’s virtual asset market. Additionally, the introduction of these ETFs may spark a potential fee competition among issuers in the future as they vie to offer the most attractive fee structures to investors.
The debut of these innovative cryptocurrency ETFs marks a notable advancement in Hong Kong’s financial sector. It opens up fresh avenues for investors to participate in the cryptocurrency market within a regulated framework, prioritizing compliance and investor protection. Will the adoption of Hong Kong Bitcoin and Ethereum ETFs match the success seen with US Bitcoin ETFs?
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