Bitcoin, Ethereum ETFs: Will Hong Kong get an edge with new approvals?

• Hong Kong has approved the first batch of spot BTC, ETH ETFs. 
• Some ETFs will have in-kind creation and redemption features. 

Hong Kong has followed the US steps by approving crypto ETFs tied to Bitcoin [BTC] and Ethereum [ETH].

At least three asset managers—Bosera, ChinaAMC (HK), and Harvest Fund—have received initial approvals. 

Interestingly, Gary Tiu, executive director at Hong Kong-based OSL Securities, noted that the approval could offer Asia an edge over the US. In a recent interview, the exec claimed,

“Right now, the U.S. has not approved any spot products. So, the Hong Kong managers are certainly standing in a very good position when they launch the ETH products in Hong Kong for sure.” 

OSL was approved as the first sub-custodian partner for ChinaAMC’s BTC and ETH ETFs. 

It is worth noting that the US spot ETH ETFs May approval odds have dimmed amidst the US SEC’s silence on the filings. But that’s not the only edge Hong Kong’s ETFs could have over the US. 

BTC, ETH ETFs in-kind subscription

The ETF product from Bosera, in partnership with HashKey Capital, will have an “in-kind” subscription. It means that users can subscribe directly to the ETF shares using BTC or ETH.  

Alternatively, investors can redeem their shares and receive actual BTC or ETH in return. On the contrary, the U.S. spot BTC ETFs only allow cash settlements on the underlying asset. 

Investor and crypto market commentator, Simon Mow, highlighted the difference as an opportunity for Asia to accumulate more BTC. 

“The Hong Kong Bitcoin ETFs will feature in-kind creation and redemption. This is a move to one-up the U.S. ETFs. The race is on to accumulate BTC in Asia”

At press time, BTC traded at $66K, up 2.5% in the past 24 hours, per CoinMarketCap, a few hours after the approvals.

However, Antony Scarramucci, Bitcoin maxi, and former White House executive, claimed that the development hasn’t been priced yet. 

“Hong Kong has approved Bitcoin and Ethereum ETFs. Not priced in.”

VanEck analysts had previously said Chinese investors were behind the recent gold accumulation and price surge. Ergo, the analyst viewed the approval of the Hong Kong ETFs as a rallying force for BTC. 

But, the ETFs’ first trading dates haven’t been disclosed. It is worth noting that the Hong Kong approvals show most parts of the vetting process are complete. 

The launch and first day of trading will happen later and hasn’t been disclosed by the Hong Kong Securities and Futures Commission. 

Even so, Gary Tiu of OSL affirmed that the approvals show that the launch day is “very soon.”

The approval of spot ETH ETFs makes Asia a first-mover. However, it remains to be seen how the overall market will react to the ETFs when they begin trading.