#Asian Markets
#Bitcoin ETF
#Daily Brew
#Crypto 360
Hong Kong approved the applications of several spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) on 15th April.
In January this year, the U.S. SEC approved 11 Bitcoin Spot ETFs, marking a major step in the wider crypto adoption. Now, Hong Kong has followed suit with the Bitcoin and Ether ETFs to be launched on the market by April 30.
The Hong Kong Securities and Futures Commission (SFC) approved the local units of China Asset Management, Harvest Global Investments, Bosera Asset Management, and HashKey Capital to issue retail asset management services related to crypto spot ETF, including several spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs).
The approval of the first-ever crypto spot ETF marks Hong Kong's official entry into the market and positions the city as a potential front-runner in Asia’s digital asset space.
Though crypto trading is banned in China, the Chinese government is slowly warming to further cryptocurrency adoption. Hong Kong is seen as a testing ground for these efforts in this regard. This comes after Hong Kong’s securities regulator announced plans to provide retail investors access to digital asset platforms last year.
We can expect to see a lot of investment in these funds on the Hong Kong Stock Exchange coming from mainland China. It the segment takes off in the market, there is a possibility that the Chinese market might become a little more receptive to crypto trading.
Crypto ETFs are the perfect combination of traditional finance (TradFi) and decentralised finance (DeFi) that bring the excitement and volatility associated with cryptocurrency to the traditional markets but cloaks them under the comparative stability of these markets.
A crypto ETF is a financial asset that allows investors to gain profits due to the steady price movements of a cryptocurrency, without the need to actually own it.
It simply means that these funds give investors, especially investors with a low-risk appetite, the opportunity to be exposed to the high rewards in the Bitcoin market, without the need to hold the coin.
A crypto ETF normally keeps an actual cryptocurrency as its primary asset and attempts to track its current price as accurately as possible.
Crypto ETFs are traded on traditional stock exchanges, which makes it easier for investors to take part in the DeFi market.
For a lot of retail investors, crypto is a risky investment.
However, with the creation of these funds, investors can worry less about the volatility rate of a cryptocurrency including its security, storage, or holding a private wallet key.
Recommended Read: What is a Public Key in Crypto?
Crypto ETFs provide shares just like stock shares. With this, investors can get exposure to the crypto market without going through the trouble of buying and holding crypto.
As per data from Farside Investors, we saw a record outflow of more than $39 million from Bitcoin and Ethereum ETFs in the Hong Kong market on May 13th.
In fact, this is the first time that all six cryptocurrency ETFs, both Bitcoin and Ethereum, saw negative outflows in the Hong Kong market.
This is the third day in a row when the segment has seen a net outflow.
All in all, the total outflow of crypto ETFs so far is $20.9 milion since the initial launch that happened on May 2nd.
Note that in the United States, 11 spot Bitcoin ETFs have over $50 billion in assets under management.
In contrast, Hong Kong's ETFs have $179.2 million in assets under management.
James Seyffart, an executive at Bloomberg Intelligence, expects a “fee war” among issuers.
Harvest Global Investments is moving much faster by removing all charges for the first six months. Following this period, it aims to levy a low 0.3% fee on its BTC and ETH funds, positioning itself below Bosera-HashKey’s 0.6% and ChinaAMC’s 0.99% fees.
“A potential fee war could break out in Hong Kong over these Bitcoin and Ethereum ETFs. Harvest coming in hot with a full fee waiver and the lowest fee at 0.3% after waiver.”
In one of the latest posts of Eric Balchunas, a Senior ETF Analyst of Bloomberg, he says that the initial expenses of these ground-breaking ETFs in Hong Kong are notably low, which suggests good results for the market:
“Fees are 30bps, 60bps, and 99bps which is on average lower than we thought, good sign.”
The U.S. SEC’s approval the first Bitcoin Spot ETFs earlier this year—a major development that expanded the investor base for Bitcoin and digital assets—has been the main subject within the digital asset market. BlackRock led these U.S. funds to draw over $12 billion in net inflows, propelling Bitcoin to a new all-time high (ATH) of over $73,000 last month.
Concurrently, newly approved Hong Kong-listed crypto spot ETFs aim to increase the availability of crypto assets to conventional investors around the region and beyond.
Despite the hype, CoinDesk reported that analysts advise that Hong Kong's impact might fall behind the U.S. explosive success as the regional issuers, though significant, don’t match the magnitude of U.S. giants with trillions under management.
*The information provided in this article has been updated based on latest developments in the crypto markets.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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Oct 29, 2024
Crypto
