First Spot Bitcoin and Ether ETFs in Asia Commence Trading in Hong Kong

This introduction of crypto ETFs took place three months subsequent to the approval by the United States of ETFs that track the actual prices of bitcoin, thereby facilitating the inclusion of this cryptocurrency into the portfolios of general investors.

The suite of inaugural digital currency ETFs joining the Hong Kong stock market encompasses a total of six funds, which are distributed by a trio of asset managers: Bosera Funds, China Asset Management (Hong Kong) Limited, and Harvest Global Investments.

Each of the asset management firms released an ETF based on the spot prices of bitcoin and another on ether, with provisions to trade these in both the currency of Hong Kong and the US dollar. Additionally, trading in the Chinese yuan was also an option offered by ChinaAMC (HK).

During the initial half-hour period of the trading session on Tuesday, the freshly introduced ETFs witnessed a price appreciation ranging from 0.62 percent to 3.81 percent.

A statement from CCData, which specializes in the analysis of digital assets, on Friday noted that the new funds may not draw an equivalent level of capital inflow compared to those in the United States.

Nonetheless, “some industry experts are under the impression that these funds may trigger other countries to sanction cryptocurrency ETFs and could assist in the expansion of digital assets’ broader acceptance,” the statement read.

Moreover, Hong Kong permits investors the option of in-kind creation and redemption with eligible dealers, which means that the cryptocurrencies themselves, bitcoin and ether, may be used for investments in these ETFs as opposed to traditional currencies like the US dollar.

Han Tongli, the Chief Executive Officer of Harvest Global, commented on the advantage of Hong Kong’s market, observing that in-kind trading is a distinct advantage over its US counterparts.

“In this competition, it isn’t just about Hong Kong versus local peers, but rather positioning Hong Kong against formidable fund management entities in the US,” noted Han, as reported by the Hong Kong-based publication Techub News.

“We represent Hong Kong in this competitive landscape, and we are committed to maintaining and enhancing its status as a premier global financial center,” added Han.

Furthermore, Han mentioned that Hong Kong’s approach could serve as a testbed for virtual asset trading for China, where such activities are currently prohibited.

Meanwhile, in the United States, the fervor for bitcoin-based ETFs has diminished since an initially robust inception in early February, according to data from Farside Investors.

Amid these developments, Hong Kong continues its pursuit to clinch a dominant position as a digital asset epicenter within the region.

Previously in December, the Securities and Futures Commission of the city announced a readiness to permit retail investors to acquire funds entirely invested in specific digital assets, which prompted the first round of applications from fund managers.