Hong Kong has approved the launch of Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs), which will differ significantly from their counterparts in the United States. The city’s regulator has given the green light for these ETFs to launch on April 30.
ChinaAMC, one of the issuers, stated in a report that its spot Bitcoin and Ether ETFs will track the performance of the Chicago Mercantile Exchange’s (CME) crypto indexes. Investors will be able to redeem their holdings in fiat money or crypto funds. Furthermore, ChinaAMC’s crypto ETFs will be available in three currencies: the U.S. dollar, Hong Kong dollar, and Chinese yuan. BOCI-Prudential, an investment asset manager, and OSL, a crypto exchange, will act as the custodians for these ETFs.
BOCI and OSL will also serve as custodians for the spot Bitcoin and Ether ETF assets of Harvest Global, another issuer. Harvest Global stated that this arrangement will address issues such as excessive margin requirements, price premiums caused by missing short positions, and roll losses, thereby accurately reflecting the real-time value of Bitcoin and Ethereum.
Meanwhile, Hong Kong-based HashKey Capital will collaborate with Bosera Asset Management to launch its spot Bitcoin and Ether ETFs. Regarding the future of these crypto ETFs, the staff at HashKey Capital expressed their optimism.
On April 24, Eric Balchunas, a senior ETF analyst at Bloomberg, mentioned that management fees for Hong Kong Bitcoin ETFs will range from 0.3% to 0.99%. This is significantly higher than the fees charged by some issuers of U.S. spot Bitcoin ETFs, which can be less than 0.25% per annum. James Seyffart, a Bloomberg analyst, commented that this could potentially lead to a fee war in Hong Kong over these Bitcoin and Ethereum ETFs.
All three ETF issuers will create and redeem ETF shares on Hong Kong’s regulated crypto exchanges, OSL and HashKey. Investors will have until 11 am local time each day to redeem their shares for cash, or until 4 pm local time for crypto withdrawals. BOCI Prudential will serve as the custodian for all issuers, and market makers such as Vivienne Court and Virtu Financial will be involved.
Related: Hong Kong approves the first Bitcoin and Ether ETFs.