On April 30, 2024, Hong Kong entered into spot cryptocurrency exchange-traded funds (ETFs) with a mix of excitement and prudence. The Hong Kong Stock Exchange (HKEX) launched six new spot Bitcoin and Ethereum ETFs.
These ETFs, issued by China Asset Management, Bosera HashKey, and Harvest International, are a remarkable achievement for Asia’s crypto market. However, the first trading day was relatively muted compared to its US counterparts.
A Mixed Bag for Hong Kong’s Spot Crypto ETFs
A local media outlet reported the initial launch size of ChinaAMC Bitcoin ETF (CAM BTC) and ChinaAMC Ether ETF (CAM ETH) were HKD 950 million and HKD 160 million, respectively. Furthermore, data from Bloomberg Intelligence revealed that CAM BTC ETF recorded $123.61 million in total assets.
These numbers showcase CAM BTC’s position as the day’s largest launch, with an increase of 1.53% in its closing price. Conversely, CAM ETH dipped by 0.78%.
Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach
Similarly, Bosera Hashkey and Harvest International experienced a mix of slight gains and modest losses across their respective ETF offerings.
The Bosera Hashkey Bitcoin ETF appreciated by 1.80%, while its Ethereum ETF fell by 0.45%. Meanwhile, Harvest Bitcoin Spot ETF (HGI BTC) and Harvest Ether Spot ETF (HGI ETH) observed upticks of 1.57% and downticks of 0.73%, respectively.
Data from Arkham Intelligence showed that Bosera Hashkey’s ETFs hold approximately $70.34 million of assets. These assets comprise 964 Bitcoin (~$57.55 million) and 4,290 Ethereum (~$12.80 million).
These outcomes suggest a higher appeal for Hong Kong’s spot Bitcoin ETFs than Ethereum variants on the first trading day.
The Hong Kong ETF issuers have adopted diverse strategies in management fees to stand out in the competitive market. For instance, Harvest International has notably set a low management fee of 0.3% for its ETFs, a rate that is waived for the first six months post-listing.
In contrast, ChinaAMC has opted for a standard fee of 0.99%. They also implement different issue prices and trading conditions for their customers.
Undeniably, these ETFs have enriched the product offerings in Hong Kong’s stock market. They also opened up new avenues for professional and retail investors. BeInCrypto reported that these ETFs are available in multiple currencies, including Hong Kong dollars (HKD), US dollars, and Renminbi (RMB).
Moreover, the ETFs are also available to international investors who meet local compliance standards. Yet, mainland Chinese investors currently face barriers to accessing Hong Kong’s spot crypto ETFs.
The Long-Term Game: Experts Weigh In
Although listing spot ETFs presents a notable step forward for Hong Kong’s position as a crypto hub, market observers offer mixed assessments. Guillermo Fernandes, founder and CEO of Blockpliance, shared his perspectives.
“Hong Kong has long served as the financial capital of Asia … For this reason, launching crypto ETFs in that market is not something that should be taken lightly, especially because they’ve approved Ethereum ETFs before the US was able to do so. Having said that, the US continues to be the largest financial market in the world, so it is natural that most of the large institution investors who wanted to add Bitcoin exposure to their portfolios have chosen to do it via the US market instead of Hong Kong,” Fernandes explained to BeInCrypto.
Read more: Crypto ETN vs. Crypto ETF: What Is the Difference?
Although the first day’s trading was somewhat subdued, these spot ETFs offer a promising new avenue for investors in Hong Kong and potentially the broader Asia-Pacific region to engage with cryptocurrency markets.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, advised tempering expectations about Hong Kong’s spot crypto ETFs. However, he believes that the numbers are impressive on a local scale.
Additionally, it is expected that investors from mainland China will try to find ways around local restrictions to take advantage of investment opportunities. Fernandes highlighted that Hong Kong is a popular destination for Chinese investors as it offers simpler Know Your Customer (KYC) processes and the convenience of similar time zones and points of contact. These factors are considered an advantage compared to the more stringent scrutiny faced in the US.
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