Hong Kong Bitcoin, Ether ETF Structures Revealed Ahead of April 30 Launch
Hong Kong's spot bitcoin and ether exchange-traded funds (ETFs) are strikingly different from their US counterparts, with the city's regulator green-lighting them for an April 30 launch.
According to a report by ChinaAMC, one of the issuers, its Bitcoin (BTC) and Ether (ETH) ETFs track the performance of the Chicago Mercantile Exchange's crypto indices. Redemptions are available in both fiat money and crypto funds. In addition, ChinaAMC's crypto ETFs are denominated in three currencies: the US dollar, the Hong Kong dollar and the Chinese yuan. Investment asset manager BOCI-Prudential and crypto exchange OSL act as custodians for the EFAs.
The two aforementioned firms hold Bitcoin and Ether ETF assets for issuer Harvest Global. BOCI and OSL “effectively solves problems such as excessive margin requirements, price premiums caused by short positions, and rollover losses, thereby accurately reflecting the real-time price of Bitcoin and Ethereum,” Harvest Global staff said in a statement.
Meanwhile, Hong Kong-based HashKey Capital will launch its Bitcoin and Ether ETFs in partnership with Bosera Asset Management. Regarding the future of crypto ETFs, their staff wrote:
“The approval of the virtual asset space ETF and a new fund registration system (allowing investors to directly subscribe Bitcoin and Ethereum to the shares of related ETFs) is expected to further stimulate the growth of the virtual asset market. Hong Kong, and even Asia, will attract more global capital flows.”
On April 24, Bloomberg senior ETF analyst Eric Balchunas noted that Hong Kong Bitcoin ETF management fees range from 0.3% to 0.99%. This is significantly higher than the US space for Bitcoin ETFs, where some issuers charge as little as 0.25% per year. Bloomberg analyst James Seifert opined that “a payment war could break out in Hong Kong over these Bitcoin and Ethereum ETFs.”
All three ETF issuers trade ETF shares on Hong Kong-regulated crypto exchanges, OSL and HashKey. Investors have until 11:00 a.m. local time each day to redeem their shares in cash or at 4:00 p.m. local time. BOCI Prudential acts as the custodian for all issuers, while market makers include Vivienne Court, Virtu Financial and others.
Related: Hong Kong Approves First Bitcoin and Ether ETF
