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Tuesday, April 16, 2024

Hong Kong Gets Bitcoin ETFs

By Mark Hunter ↗

3 hours agoTue Apr 16 2024 09:34:44

Reading Time: 2 minutes

  • Hong Kong has granted conditional approvals for spot-Bitcoin and Ethereum ETFs
  • Harvest Global Investments and a partnership between HashKey Capital and Bosera Asset Management have secured initial approvals
  • However, hopes for a US-style Bitcoin rally have been dashed due to lower inflows and concerns over the Israel-Iran conflict

Hong Kong yesterday granted conditional approvals for asset managers to launch spot-Bitcoin and Ethereum exchange-traded funds (ETFs) in a widely anticipated move. Harvest Global Investments and a partnership between HashKey Capital and Bosera Asset Management have secured initial approvals, signaling a significant milestone in Hong Kong’s quest to become a prominent digital asset hub. Any hopes that the approval would spark a US-style Bitcoin rally have been dashed, however, with inflows set to be far lower and the Israel-Iran conflict spooking markets.

Hong Kong ETFs Will Operate Differently

Rumors began to swirl at the end of last week that Hong Kong’s Securities and Futures Commission (SFC) would grant Bitcoin and Ethereum ETFs to one or both of the applicants, and on Monday the rumors were proved to be true. 

The granting of the ETFs to Harvest Global and Hashkeyl/Bosera marks a watershed for crypto adoption in the East, although things will run a little differently with their offerings. In contrast to their US counterparts, these ETFs in Hong Kong will operate on an in-kind subscription and redemption mechanism, offering a unique approach to investors. This differs from the traditional cash redemption model adopted by US funds, a decision that reflects Hong Kong’s commitment to innovation in the cryptocurrency space and its efforts to attract investment in the sector.

Bitcoin Fails to Launch on News

Any hopes that the news would spark a Bitcoin rally were dashed, with the potential conflict between Israel and Iran spooking global markets, including the crypto market; Bitcoin has dropped $10,000 since the attack. However, as ETF expert Eric Balchunas pointed out on X, the funds haven’t gone live yet, although he did pour cold water on the idea that a massive inflow is coming:

Latest on HK spot Bitcoin ETFs: They have been approved to exist but not launch (yet). Rumor has it launching next wk so to not compete w Dubai conf. Don’t expect a lot of flows (I saw one estimate of $25b that’s insane). We think they’ll be lucky to get $500m. Here’s why:
1. HK…

— Eric Balchunas (@EricBalchunas) April 15, 2024 ↗

Balchunas also pointed out that Chinese mainland investors will not get access to the ETFs, further reducing the amount of capital that will flow into the funds once they launch. He added, however, that it was good news for Bitcoin overall as it “opens up more avenues to invest,”

Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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