Crypto fans are anticipating the introduction of spot exchange-traded funds linked to Bitcoin in Hong Kong tomorrow with great anticipation, and the ETF craze is still going strong. The two nations' approaches to ETF conduct vary in a number of ways, despite sharing a similar definition.
ETF Redemption: U.S. cash-created ETFs versus in-kind cryptocurrency ETFs in Hong Kong
How the assets are redeemed is the primary distinction between crypto ETFs in the US and Hong Kong. The redemption in Hong Kong is in-kind, whereas the US is generated with cash.
According to Hong Kong's strategy, ETF intermediaries that wish to offer additional ETF shares must do so with real cryptocurrencies, such as Bitcoin. The term "cash-created" refers to the fact that intermediaries in the US are able to create ETF shares without having to deal with cryptocurrencies.
During a Bloomberg webinar, Bloomberg's ETF analyst Rebecca Sin said, "I think the reason why Hong Kong did in-kind is because ultimately we're trying to differentiate ourselves from the United States."
The Ether ETF spot in Hong Kong
Additionally, Hong Kong will list its first Ethereum ETF before the US. While investors wait for the securities authorities' verdict in May, the status of ether exchange-traded funds (ETFs) in the US remains in flux.
But, Canadians authorized their own Ethereum ETF in April 2021, making them the first nation to sell a regulated cryptocurrency product. Hong Kong is not the first to offer an Ethereum ETF. There are now five Ethereum ETFs available in Canada.
Crypto ETFs Make Their Debut
Three Chinese companies will debut cryptocurrency exchange-traded funds (ETFs) on the Hong Kong Stock Exchange (HKSE) tomorrow, April 30, through their Hong Kong subsidiaries. China Asset Management, Harvest Global Investments, and Bosera Asset Management are the three.
After CSOP Asset Management established the CSOP Bitcoin Futures ETF and the CSOP Ether Futures ETF, Hong Kong first stepped into regulated digital assets in late 2022. Amidst increased investor and institutional interest, Samsung Asset Management announced another future-based Bitcoin ETF in January.
This is a significant development for regulated cryptocurrency investments; spot ETFs were introduced in the US in January 2024.
Investors from mainland China will not be permitted to join in the new ETFs, even if they are being started by Chinese companies. Citizens of the People's Republic of China are not allowed to participate in any cryptocurrency-related activities, including ETFs. This law dims hopes over mainland China's position on exchange-traded funds (ETFs).
Statistics
ETFGI statistics indicates that in Q1 2024, US assets held in exchange-traded funds (ETFs) reached a record $8.87 trillion. Record-breaking $103.17 billion in inflows were recorded in March, raising the total to $232.18 billion.
The combined assets under management of the three listed cryptocurrency ETF providers on HKEX are close to 1.3 billion Hong Kong dollars ($170 million). The HKEX ETF market has a total valuation of $1 billion, or 8.6 billion HKD. It is evident that the crypto ETF market in Hong Kong is much smaller. In summary, the Hong Kong ETF market is 0.6% larger than the US market.
In conclusion, the US ETF eclipses the Hong Kong ETF, but the former exhibits greater promise in listing a wider variety of cryptocurrency ETF products.
April 2024, Cryptoniteuae