Bitcoin ETFs could be a model of sorts for Hong Kong’s growing trading market.

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According to Bloomberg ETF analysts, Hong Kong is poised to green light innovation in the form of Bitcoin ETFs. This development is expected to reduce costs and provide tax benefits and ultimately attract more capital and increase transaction volume.

Hong Kong looks set to allow innovations and spot redemptions for bitcoin ETFs in 2Q (unlike the US only for financial innovations) which will help keep the tone and voice in the fast-growing region in a new note from @Rebeccasin_SK today pic.twitter.com/sDsS4nbzGi

— Eric Balchunas (@EricBalchunas) March 26, 2024

According to Bloomberg analyst Eric Balchunas, Hong Kong ETFs have a trading price. It has been seen in the last few years. Approval of both in-kind and cash-generating models may be repeated. The success of ETFs In the US and attracts investment.

Anticipation builds as Hong Kong moves closer to approving its first spot Bitcoin ETFs. In December last year, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) issued brand new Rules governing the possibility of investment funds, brokerages and asset managers offering Crypto ETFs.

HashKey Group COO Livio Weng told local media Caixin that more than ten fund companies are preparing to launch spot ETFs in Hong Kong. Weng waits for a strong push. launch Hong Kong spot ETFs in the coming months.

as if dead end January, Harvest Fund (HFM), an asset manager based in China, filed for a spot Bitcoin ETF with Hong Kong's SFC. They also have other regional financial institutions It has been seen. Interest in launching Bitcoin ETF products in Hong Kong.

A cool Market opportunity

In the US, where several venues began trading Bitcoin ETFs earlier this year, such products are limited to cash-only transactions. The cash model treats Bitcoin ETF shares as cash, selling Bitcoin to meet them while redemption The in-kind model treats shares like Bitcoin, which directly transfers the underlying asset.

For BlackRock, the world's leading ETF issuer, the in-kind redemption model is preferred because it is generally more efficient and less costly.

BlackRock wrote in the iShares Bitcoin ETF prospectus that “…they use in-kind creations and redemptions for all non-Bitcoin commodities, such as gold and silver.” “…it is generally more efficient and less expensive to use in-kind orders than cash orders for commodities, because there are fewer steps in the process and therefore less risk of enforcement when authorized. The participant can manage the buying and selling of the underlying asset.

Hong Kong's expected decision to adopt both in-kind and cash-based models for Bitcoin ETFs could give it a leg up on the global ETF competition. According to Noel Acheson, author of the “Crypto is Macro Now” newsletter, this could open a new wave of investment from all over China.

“The Asian crypto market is huge compared to the US crypto market. Size,” he said. Acheson. “A small percentage of Chinese investors are finding legal recourse. [to invest in bitcoin] It will be useful.”

As Acheson suggests, high volume can reflect two options: either saturation brand new Investors in Asia or a deeper regional familiarity with crypto. This level of convenience could fuel mainstream adoption and attract significant investment through approved channels such as listed ETFs in Hong Kong.

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