Hong Kong is scheduled to start trading spot Bitcoin ETFs next week; however, analysts are not overly optimistic regarding inflows compared to US funds.
As Hong Kong intensifies its efforts to list the first batch of spot Bitcoin and Ethereum ETFs, China’s leading asset managers are finalizing plans to begin trading by April 30.
Asian crypto investors are enthusiastic about the launch, following the remarkable performance of US spot Bitcoin ETFs, which amassed over $56 billion in assets in less than three months.
Competing With US Bitcoin ETFs
Bosera and HashKey Capital have jointly declared the implementation of an in-kind subscription and redemption system for spot ETFs in Hong Kong.
In contrast to US funds, which engage in cash redemptions, this facilitates the exchange of fundamental assets for ETF units and vice versa.
Evgeny Gaevoy, co-founder of crypto liquidity provider Wintermute Trading Ltd, asserts that market makers, digital asset exchanges, and crypto natives find the in-kind approach especially appealing.
It provides increased efficacy and opportunities for arbitrage.
According to a HashKey spokesperson, trading in the Bosera-HashKey Capital spot instruments will commence on April 30.
Three crypto-futures-based exchange-traded funds (ETFs) have been listed thus far in Hong Kong: Samsung Bitcoin Futures, CSOP Bitcoin Futures, and CSOP Ether Futures.
However, their total assets are approximately $175 million, considerably less than US offerings like the ProShares Bitcoin Strategy ETF, comprised of derivatives valued at $2.5 billion.
Gaevoy added: “Setting realistic expectations for the Hong Kong ETF market is crucial, especially when considering the relatively modest size of the region’s existing futures ETFs.”
Does Hong Kong Have Its Own BlackRock
Hong Kong has been competing with Dubai and Singapore for more than a year to establish a highly regulated center for the virtual asset industry.
The demand for the forthcoming ETFs will indicate Hong Kong’s progress in this undertaking.
Potential demand generators include crypto exchanges, market makers in the Asia-Pacific region, and Chinese wealth held in the city.
Rebecca Sin, an ETF analyst at Bloomberg Intelligence, estimated that the Hong Kong Bitcoin ETFs could amass no more than $1 billion in assets under management in two years.
US-based Bitcoin funds from industry titans such as BlackRock Inc. and Fidelity Investments have piqued global interest.
However, Harvest Global and Bosera Asset Management have not received comparable acclaim as potential issuers in Hong Kong.
Roger Li, co-founder of One Satoshi, said: “Hong Kong doesn’t have the ‘BlackRock’ effect to call on.”
