Original - Odaily
Author - Wenser,Qin Xiaofeng
After the United States passed the Bitcoin spot ETF at the beginning of the year, Hong Kong, as the new bridgehead of Eastern Web3, finally couldnt sit still.
This afternoon, Harvest International, Boshi Fund and China Asset Management (Hong Kong) successively announced that they have been approved by the Hong Kong Securities Regulatory Commission to provide virtual asset management services to investors, and plan to issue ETF products that can invest in Bitcoin spot and Ethereum spot.
As early as a week ago, Coindesk, TheBlock and other media reported that the Hong Kong Securities and Futures Commission plans to approve virtual asset spot ETF products, which are expected to be listed as soon as the end of April. Now that the boots have landed, it is announced that the first batch of Bitcoin spot ETFs and Ethereum spot ETFs in Asia are officially launched.
Affected by the news, Bitcoin once rose above US$66,000 in the afternoon, reaching a maximum of US$66,900, and is currently trading at US$66,700, with a 24 H increase of 3.8%; ETH rose to exceed US$3,200, and was temporarily trading at US$3,250, with a 24 H increase of 6.5%.
What are the differences between Hong Kong’s crypto asset spot ETF and the spot ETF in the United States at the beginning of the year? What does it mean for the entire crypto market, and what positive impacts will it bring? In addition to the three funds mentioned above, what other companies are about to enter the market? Odaily will answer the above questions one by one in this article.
1. 3 approved spot ETFs with a total managed assets of over US$650 billion
Last week, Tencent Finances First Line reported that the Hong Kong Securities Regulatory Commission plans to announce the list of Hong Kongs first batch of Bitcoin spot ETFs on April 15. The entire Bitcoin spot ETF project has been detailed in advance with the Hong Kong Stock Exchange in the early stages. Communication and planning are expected to be completed in approximately 10 days. The China Securities Regulatory Commission originally planned to list Bitcoin spot ETFs in Hong Kong around April 25 and no later than the end of April.
This afternoon, Boshi International, China Asset Management (Hong Kong), and Harvest International successively issued documents stating that the issuance of virtual asset spot ETF products has been approved in principle by the Hong Kong Securities Regulatory Commission; after being approved for inclusion, the issued varieties include not only Bitcoin, but also the U.S. SEC. Ethereum issued.
Interestingly, Boshi International and Harvest International deleted the articles on their WeChat public accounts just half an hour after they were posted. Subsequently, Harvest re-issued the announcement and marked This document was issued by Harvest International Asset Management Co., Ltd. and has not been reviewed by the Hong Kong Securities Regulatory Commission at the end of the article. At present, no relevant announcements can be found on the official website of the Hong Kong Securities Regulatory Commission for the virtual asset spot ETFs of the three companies. It is speculated that it may need to wait for the official announcement before it is officially announced to the public.
In addition, Odaily also found that the spot ETF products of the three funds are all cooperating with the only two licensed virtual asset platforms in Hong Kong (OSL and HashKey). In particular, Boshi Funds products are jointly issued and managed with HashKey Capital.
Pan Zhiyong, Chairman and CEO of OSL Group, said in the announcement: We are very pleased to see that the project has been approved in principle. This is an epoch-making development in the ETF market. We are deeply honored to play a role in this historic moment. Key role, and expressed gratitude to Harvest and ChinaAMC for choosing OSL as their first virtual trading and custody partner. This reflects the markets trust in us, just as leading issuers in the US fund industry have chosen well-known platforms like Coinbase. Same.
In fact, it is no surprise that China Asset Management (Hong Kong) and Harvest International became the first companies to launch spot ETF products.
In the early morning of April 10, the Hong Kong Securities Regulatory Commission updated the list of fund companies that manage virtual assets on its official website, adding Harvest International Asset Management Company and China Asset Management (Hong Kong) Co., Ltd., which are the original traditional asset management businesses of these public funds. On top of that, virtual asset management business has been added. According to the official website of the Hong Kong Securities Regulatory Commission, there are currently 18 funds in Hong Kong that can conduct currency circle asset management. However, Harvest International and China Asset Management are among the first batch of public funds in Hong Kong to enter the currency circle.
At present, there is no relevant information disclosed about the more specific and detailed information about the three products, and it remains to be further observed. A spokesperson for HKEX said: HKEX is committed to supporting the continued growth and development of its active ETF ecosystem. If there are new developments, we will promptly update the market.
2. Viewpoint: Tens of billions of incremental funds flow into the market
The appeal of Bitcoin spot ETFs for incremental funds is undoubted. According to SoSoValue data, in the past three months, the cumulative net inflow of U.S. Bitcoin spot ETFs has exceeded US$12.5 billion, and the total net asset value has exceeded US$58 billion.
Hong Kong’s adoption of crypto spot ETFs this time is also regarded as a major benefit by industry insiders. However, there is some controversy over the amount of capital inflows.
Singapore digital asset trading institution QCP Capitalexpress, the approval of Bitcoin and Ethereum spot ETFs in Hong Kong will unleash institutional investment demand during Asian trading hours. They believe, “Previously players wanting to invest have been limited to the US session, but now this gives institutional investors an option based on the Asian time slot. We believe this will be bullish in the short term, but there is more important factors and drivers, such as macro events.”
In a report, crypto asset manager Matrixportpredict, a Bitcoin ETF listed in Hong Kong could unleash up to $25 billion in demand. “As mainland investors take advantage of the southbound trading scheme, up to $25 billion in funds could flow from mainland China if a Hong Kong-listed Bitcoin spot ETF is approved.”
Adrian Wang, CEO of Asian digital asset management company Metalphaexpress, the upcoming spot Ethereum ETF may gain a lot of traction, “I think the Ethereum spot ETF may be more influential and important compared to Bitcoin because investors can choose to invest in Bitcoin through mining companies and other To gain exposure to Bitcoin, there are no ETH-related stocks.”
Emma, a partner at Xinhuo Asset Management, believes that according to the annual Asset and Wealth Management Activities Survey released by the Hong Kong Securities Regulatory Commission, by the end of 2022, the total value of Hong Kongs asset and wealth management business will exceed HK$30.5 trillion (approximately US$3.9 trillion) ), assuming that 1% of assets enter the crypto market through Bitcoin spot ETF, it will bring about 300 billion Hong Kong dollars (approximately US$38 billion) in liquidity, which is even much higher than the market growth after the issuance of the US Bitcoin spot ETF. volume (approximately US$27 billion).
Xu Weizhi of Guosen Securities (Hong Kong) Research Institute pointed out that the launch of Bitcoin spot ETF will promote Bitcoin and other crypto assets to reach a larger financial base, including larger investors such as qualified investors, institutional investors and retail investors. groups, bringing more liquidity to the encryption market and accelerating the compliance process of the encryption industry. Hong Kong will also strengthen its position as the regions leading digital asset center and support its continued development as Asias premier ETF market.
Guosheng Securities analyst Song Jiaji believes that the Bitcoin spot ETF uses Bitcoin spot as the underlying asset, allowing investors to gain exposure to Bitcoin and related assets without having to research, purchase or store the actual cryptocurrency (or derivative assets) , very suitable for the broader capital market and investors in terms of compliance, fees, liquidity and management costs.
It can be seen that the current market as a whole has a positive attitude towards the approval of the Hong Kong Bitcoin Spot ETF and Ethereum Spot ETF, which has attracted a large number of buyers to join in, which to a certain extent has slowed down the impact of the international war on Bitcoin and Ethereum. The sharp decline caused by the impact of the epidemic. fromData on the chainJudging from the news, shortly after the news of Hong Kongs approval of spot Bitcoin and Ethereum ETF applications was made public today, the whale once again increased its holdings of ETH - spending a total of 31.88 million USDT and USDC to purchase 9,787 ETH, with an average price of approximately US$3,257.
3. The difference between Hong Kong spot ETF and other ETFs
There is no shortage of crypto ETF products in the Hong Kong market, but they are all futures ETFs and are not very attractive to investors.
As early as October 2022, the Hong Kong Securities and Futures Commission approved the issuance of futures-based virtual asset ETFs. At the end of the same year, CSOP, the Hong Kong subsidiary of Southern Fund, officially launched Asias first cryptocurrency ETFs in Hong Kong: CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF. The Hong Kong stock market became the first in Asia to directly provide investors with Capital Markets for Bitcoin and Ethereum Futures ETFs. There are currently three virtual currency ETFs listed in Hong Kong, all of which are virtual asset futures ETFs, mainly issued by CSOP and Samsung Asset Management (Hong Kong).
As of April 15, the CSOP Bitcoin Futures ETF managed assets of US$115 million, the CSOP Ethereum Futures ETF managed assets of US$28 million, and the Samsung Bitcoin Futures ETF managed assets of US$150 million. Since these three products use margin to participate in the trading of Bitcoin and Ethereum futures listed on the CME Group, they have always had little impact on the spot market prices of Bitcoin and Ethereum, and their liquidity is relatively limited. In addition, the management fees of these products do not have much advantage compared with the fund management fees in the global market.
After the well-known exchange FTX crashed in 2022, Wang Yi, head of quantitative investment at CSOP, once said: Some cryptocurrency platforms have recently experienced liquidity problems. Our two cryptocurrency futures ETFs show that Hong Kong is still open to the development of virtual assets. Attitude. It is also enough to see that the liquidity of futures ETFs is still a core issue that many investors are concerned about, so the market purchases driven by them are relatively limited.
The crypto spot ETF passed this time can fill the previous market gap to a large extent and enhance Hong Kongs competitiveness in the global Web3 market.
Moreover, unlike the U.S. SEC’s approval of Bitcoin spot ETFs, the Bitcoin spot ETFs and Ethereum spot ETFs approved by the Hong Kong Securities Regulatory Commission allow for redemptions in two ways: cash (in-cash) or in-kind (in-kind). .
For cash redemptions, the fund must obtain virtual assets on a licensed exchange in Hong Kong, which can be on-exchange transactions or over-the-counter transactions; for physical redemptions, virtual assets need to be transferred into or out of the funds custody account through a brokerage firm. Therefore, in terms of investment flexibility and directness, Hong Kong Bitcoin Spot ETF and Ethereum Spot ETF provide investors with more choices and more liquidity possibilities, and also provide diversified position allocation for institutional investors and retail investors. Than laid the foundation.
4. Other players actively prepare spot ETFs
In addition to the three funds announced today, several platforms are also actively preparing to apply and plan to launch crypto spot ETF products.
1. Value Partners Yibo Finance
As two asset management companies that jointly submitted applications for Bitcoin spot ETFs to the Hong Kong Securities Regulatory Commission on March 27 this year, Value Partners and SFG Financial (VSFG) are also popular candidates for ETF approval, although there is currently no official announcement from either of them. The approval announcement was released, but according to previous news, during the application, the two companies asset management scale target for this year was US$500 million (approximately HK$3.9 billion).
Regarding the cooperation on the Hong Kong Bitcoin spot ETF, Value Partners Group CEO Huang Huimin once publicly stated: The plan to launch the spot Bitcoin ETF marks our first cooperative initiative, allowing Hong Kong investors to have access to the worlds largest digital assets while enjoying The convenience and efficiency of ETF tools, coupled with Value Partners’ extensive knowledge and track record in managing ETFs and VSFG’s extensive experience, enable us to provide clients with more investment options, especially virtual asset investment options, to help them seize market opportunities and Navigate this dynamic and evolving space.”
2. Victory Securities
As the first securities company in Hong Kong to launch the VictoryX APP, a stock and currency trading application, and the first securities firm in Hong Kong to be approved by the Securities Regulatory Commission to realize coin in and currency out, Victory Securities was no less generous in the application process for Bitcoin spot ETF. In 2023, Victory Securities was approved for multiple virtual asset business-related licenses including No. 1 (Virtual Asset Trading), No. 4 (Virtual Asset Consulting Services) and No. 9 (Virtual Asset Management Services). Convenient trading channels and complete qualification licenses allow Victory Securities to combine its existing brand advantages to help subsequent diversified customers quickly adapt to the investment deployment environment of virtual assets and find new growth points for virtual assets.
Chen Peiquan, executive director of Victory Securities, said when the VictoryX APP was released: Investors requirements for trading platforms have continued to rise in recent years. Victory Securities has seen this and has spent tens of millions to build an exclusive stock and currency trading APP in the market. In addition, it has obtained the approval from the China Securities Regulatory Commission With the approval of the meeting, Victory Securities is expected to achieve greater success in the field of virtual assets. The App successfully developed by the independent research and development team is not only a big step forward for Victory Securities into financial technology, but also means that the established Chinese securities companies are countercurrent. We still have the courage to innovate and strive towards the goal of becoming the most influential virtual asset brokerage in Hong Kong and even the Asia-Pacific region.”
3.HashKey
As one of the licensed cryptocurrency exchanges in Hong Kong, HashKeyrecently announcedSupport work for product features and related infrastructure services has been completed for a potential spot Bitcoin ETF in Hong Kong. Weng Xiaoqi, CEO of HashKey Exchange, said that the fund issuer working with HashKey has completed the development of its spot Bitcoin ETF. HashKey will provide infrastructure support for the ETF and has entered the integration and functional testing stage.
Not only that, HashKey will also personally participate in the issuance and management of Bitcoin spot ETFs. On April 11, HashKey Capital announced that it had obtained an exemption from the qualified investor clause in HashKey Capital Limited’s existing asset management (No. 9) license from the Hong Kong Securities Regulatory Commission. In the future, HashKey Capital Limited will be able to provide fund product services related to virtual assets for retail investors (specific products require final approval from the Hong Kong Securities and Futures Commission). The license upgrade brings new product categories to HashKey Capital and will also allow it to reach a wider range of investor groups.
5. Conclusion
In the past, Hong Kong’s layout and actions in the Web3 field were always slow, which caused practitioners in the encryption industry and financial field to be dissatisfied with the development of Hong Kong’s virtual asset industry. However, this time the launch of Bitcoin spot ETF and Ethereum spot ETF , is expected to change this passive situation, while expanding the incremental market, build a bridge between traditional finance and virtual assets, so as to achieve a wider market win-win situation.
