Original | Odaily Planet Daily
Author | Wenser, Qin Xiaofeng
After the United States approved a Bitcoin spot ETF at the beginning of the year, Hong Kong, as the new frontier of the Web3 in the East, finally couldn't sit still.
This afternoon, Bosera Fund, CSOP, and Huaxia Fund (Hong Kong) announced successively that they have been approved by the Hong Kong Securities and Futures Commission to provide virtual asset management services to investors and plan to issue ETF products that can invest in Bitcoin spot and Ethereum spot.
As early as a week ago, Coindesk, TheBlock, and other media reported that the Hong Kong Securities and Futures Commission planned to approve virtual asset spot ETF products, which are expected to be listed as early as the end of April. Now, the shoe has dropped, announcing the official launch of the first batch of Bitcoin spot ETF and Ethereum spot ETF in Asia.
Affected by the news, Bitcoin rose sharply to break through $66,000 in the afternoon, reaching a high of $66,900, currently at $66,700, with a 24-hour increase of 3.8%; ETH rose to break through $3,200, currently at $3,250, with a 24-hour increase of 6.5%.
What are the differences between Hong Kong's spot crypto asset ETF and the US spot ETF at the beginning of the year? What does it mean for the entire crypto market, and what positive impacts will it bring? Besides the aforementioned three funds, which other companies are about to enter the market? Odaily Planet Daily will answer these questions one by one in this article.
I. Three approved spot ETFs, with a total managed asset scale of over $650 billion
Last week, Tencent Finance's "First Line" reported that the Hong Kong Securities and Futures Commission planned to announce the list of the first batch of Bitcoin spot ETFs in Hong Kong on April 15. The early stage of the entire Bitcoin spot ETF project and the Hong Kong Stock Exchange had detailed communication and plans, and it was expected to be completed in about 10 days. The Securities and Futures Commission originally planned to list the Bitcoin spot ETF in Hong Kong around April 25, at the latest by the end of April.
This afternoon, Bosera Fund, Huaxia Fund (Hong Kong), and CSOP successively announced that they have obtained the preliminary approval from the Hong Kong Securities and Futures Commission to issue virtual asset spot ETF products; after being approved, the varieties to be issued include not only Bitcoin but also Ethereum, which has not yet been approved by the US SEC.
Interestingly, just half an hour after Bosera Fund and CSOP released their announcements, they deleted the articles on their WeChat public accounts. Subsequently, CSOP reissued the announcement and marked at the end of the article "This document is issued by CSOP Asset Management Limited and has not been reviewed by the Hong Kong Securities and Futures Commission." Currently, the virtual asset spot ETFs of the three companies have not been found on the official website of the Hong Kong Securities and Futures Commission. It is speculated that it may need to wait for the official announcement before it can be officially announced to the public.
In addition, Odaily Planet Daily also found that the spot ETF products of the three funds are all cooperated with the only two licensed virtual asset platforms in Hong Kong (OSL and HashKey). In particular, the product of Bosera Fund is jointly issued and managed with HashKey Capital.
Pan Zhiyong, Chairman of the Board and CEO of OSL Group, stated in the announcement, "We are very pleased to see the preliminary approval of the project has been obtained, which is a landmark development in the ETF market. We are honored to play a key role at this historic moment and thank CSOP and Huaxia for choosing OSL as their first virtual trading and custody partner. This reflects the market's trust in us, just like leading issuers in the US fund industry have chosen well-known platforms like Coinbase."
In fact, it is not surprising that CSOP and Huaxia Fund (Hong Kong) became the first companies to launch spot ETF products.
In the early hours of April 10, the Hong Kong Securities and Futures Commission updated the list of fund companies managing virtual assets on its official website, adding CSOP Asset Management Company and Huaxia Fund (Hong Kong) Limited, which added virtual asset management business on top of their existing traditional asset management business. The official website of the Hong Kong Securities and Futures Commission shows that there are now 18 funds in Hong Kong that can manage "coin circle" assets. However, CSOP and Huaxia Fund are among the first public funds in Hong Kong to enter the "coin circle" list.
Currently, there is no specific detailed information publicly disclosed about the three products, and further observation is needed. A spokesperson for the Hong Kong Stock Exchange stated, "The Hong Kong Stock Exchange is committed to supporting the continuous growth and development of its active ETF ecosystem. If there are new developments, we will promptly inform the market."
II. Viewpoint: Hundreds of billions of incremental funds flowing into the market
The attractiveness of Bitcoin spot ETF to incremental funds is beyond doubt. According to SoSoValue data, in the past three months, the cumulative net inflow of the US Bitcoin spot ETF has exceeded $12.5 billion, and the total net asset value has exceeded $58 billion.
The approval of the crypto spot ETF in Hong Kong this time is also seen as a major positive by industry insiders. However, there is some controversy about the amount of funds flowing in.
Singapore digital asset trading firm QCP Capital stated that after Bitcoin and Ethereum spot ETFs were approved in Hong Kong, institutional investment demand will be released during the Asian trading session. They believe, "Previously, participants who wanted to invest were limited to the US session, but now this provides an option for institutional investors based on the Asian time zone. We believe this will see a short-term rise, but there are more important factors and driving factors, such as macro events."
Crypto asset management firm Matrixport predicted in a report that the Bitcoin ETF listed in Hong Kong may release demand of up to $25 billion. "With mainland investors utilizing the Southbound Connect plan, if the Bitcoin spot ETF listed in Hong Kong is approved, up to $25 billion in funds may flow in from mainland China."
Asia-based digital asset management company Metalpha's CEO Adrian Wang stated that the upcoming Ethereum spot ETF may have a significant appeal, "I believe that compared to Bitcoin, the Ethereum spot ETF may be more influential and important because investors can choose to gain exposure to Ethereum through Bitcoin-related stocks such as mining companies, but there are currently no stocks related to ETH concepts."
Emma, a partner at New Fire Capital, believes that according to the Hong Kong Securities and Futures Commission's "Asset and Wealth Management Activities Survey" annual report, by the end of 2022, the total value of asset and wealth management business in Hong Kong exceeded HK$30.5 trillion (approximately US$3.9 trillion). Assuming that 1% of assets enter the crypto market through Bitcoin spot ETF, it could bring in approximately HK$300 billion (approximately US$38 billion) in liquidity, even higher than the market increment after the issuance of the US Bitcoin spot ETF (approximately US$27 billion).
Xu Weizhi, from Guosen Securities (Hong Kong) Research Institute, pointed out that the launch of the Bitcoin spot ETF will drive greater capital inflows into assets such as Bitcoin and other cryptocurrencies, including a larger investor base such as qualified investors, institutional investors, and retail investors, bringing more liquidity to the crypto market and accelerating the compliance process in the crypto industry. Hong Kong will also strengthen its position as a leading digital asset center in the region and support its continued development as the preferred ETF market in Asia.
Song Jiagi, an analyst at Guosen Securities, believes that the Bitcoin spot ETF, based on Bitcoin spot as the underlying asset, allows investors to gain exposure to Bitcoin and related assets without the need to research, purchase, or store actual cryptocurrencies (or derivative assets), making it very suitable for a broader capital market and investors in terms of compliance, costs, liquidity, and management costs.
It can be seen that the overall market currently holds a positive attitude towards the approval of the Hong Kong Bitcoin spot ETF and Ethereum spot ETF, attracting a large number of buyers and to some extent alleviating the significant decline in Bitcoin and Ethereum caused by international geopolitical tensions. According to on-chain data, shortly after the news of the approval of the Bitcoin and Ethereum spot ETF applications in Hong Kong was made public today, whales once again increased their holdings of ETH—spending a total of 31.88 million USDT and USDC to purchase 9,787 ETH, with an average price of approximately $3,257.
III. Differences between Hong Kong spot ETF and other ETFs
The Hong Kong market does not lack crypto ETF products, but they are all futures ETFs and are not very attractive to investors.
As early as October 2022, the Hong Kong Securities and Futures Commission approved the issuance of futures-based virtual asset ETFs. At the end of the same year, Southern Fund's Hong Kong subsidiary, Southern Dongying, officially launched the first batch of cryptocurrency ETFs in Asia in Hong Kong: Southern Dongying Bitcoin Futures ETF and Southern Dongying Ethereum Futures ETF, making the Hong Kong stock market the first capital market in Asia to directly provide Bitcoin and Ethereum futures ETFs to investors. Currently, there are a total of three virtual currency ETFs listed in Hong Kong, all of which are virtual asset futures ETFs, mainly issued by Southern Dongying and Samsung Asset Management (Hong Kong).
As of April 15, the managed asset scale of Southern Dongying Bitcoin Futures ETF is $115 million, the managed asset scale of Southern Dongying Ethereum Futures ETF is $28 million, and the managed asset scale of Samsung Bitcoin Futures ETF is $150 million. Since these three products participate in the trading of Bitcoin and Ethereum futures on the Chicago Mercantile Exchange with margin, they have had a relatively small impact on the prices of Bitcoin and Ethereum spot markets and relatively limited liquidity. In addition, the management fees of these products do not have much advantage compared to fund management fees in the global market.
After the well-known exchange FTX's collapse in 2022, Wang Yi, head of quantitative investment at Southern Dongying, stated, "Recently, some cryptocurrency platforms have experienced liquidity issues. Our two cryptocurrency futures ETFs show that Hong Kong still maintains an open attitude towards the development of virtual assets." This indicates that liquidity of futures ETFs is still a core issue of concern for many investors, leading to relatively limited market purchases.
The approved crypto spot ETFs this time can largely fill the previous market gap and enhance Hong Kong's competitiveness in the global Web3 market.
Furthermore, unlike the approval of the Bitcoin spot ETF by the US SEC, the Bitcoin spot ETF and Ethereum spot ETF approved by the Hong Kong Securities and Futures Commission this time allow for redemption and subscription through both cash (in-cash) and in-kind methods.
For cash redemption and subscription, the fund must obtain virtual assets on a licensed exchange in Hong Kong, which can be traded on or off the exchange. For in-kind redemption and subscription, virtual assets need to be transferred in or out of the fund's custody account through a brokerage firm. Therefore, in terms of investment flexibility and directness, the Hong Kong Bitcoin spot ETF and Ethereum spot ETF provide investors with more choices and more liquidity possibilities, laying the foundation for institutional investors and retail investors to diversify their portfolio allocations.
IV. Other players actively preparing for spot ETFs
In addition to the three funds announced today, several other platforms are also actively preparing to apply and plan to launch crypto spot ETF products.
1. Huili Fund & VSFG
As two asset management companies that jointly submitted a Bitcoin spot ETF application to the Hong Kong Securities and Futures Commission on March 27 this year, Huili Fund and VSFG are also popular contenders for this ETF approval. Although there is currently no official announcement from either of them regarding approval, according to previous reports, their target asset management scale for this year is $500 million (approximately HK$3.9 billion).
Regarding the cooperation on the Hong Kong Bitcoin spot ETF, Huang Huimin, CEO of Huili Group, publicly stated, "The plan to launch a Bitcoin spot ETF marks our first collaboration, allowing Hong Kong investors to access the world's largest digital assets and enjoy the convenience and efficiency of ETF tools. With Huili's rich knowledge and performance record in managing ETFs and VSFG's extensive experience, we have the ability to provide customers with more investment choices, especially in virtual asset investment choices, helping them seize market opportunities and navigate this dynamic and constantly evolving space."
2. Victory Securities
As the first brokerage to launch the stock-currency trading app VictoryX APP and the first brokerage in Hong Kong to be approved by the Securities and Futures Commission for "currency in and out," Victory Securities is also not far behind in the Bitcoin spot ETF application process. In 2023, Victory Securities obtained multiple virtual asset business-related licenses, including No. 1 (virtual asset trading), No. 4 (virtual asset advisory services), and No. 9 (virtual asset management services). With convenient trading channels and complete qualification licenses, Victory Securities can leverage its existing brand advantages to help a diverse range of clients quickly adapt to the investment deployment environment of virtual assets and explore new growth points in virtual assets.
Chen Peiquan, Executive Director of Victory Securities, stated at the release of VictoryX APP, "In recent years, investors' requirements for trading platforms have been constantly increasing. Victory Securities has seen this and spared no expense to create the market-exclusive stock-currency trading APP. Coupled with the approval of currency in and out by the Securities and Futures Commission, Victory Securities is expected to achieve greater success in the field of virtual assets. The app, successfully developed by our in-house research team, not only marks a major step for Victory Securities in entering financial technology but also signifies that the long-established Chinese-funded brokerage is still innovative in the face of adversity, aiming to become the most influential virtual asset brokerage in Hong Kong and even the Asia-Pacific region."
3. HashKey
As one of the licensed cryptocurrency exchanges in Hong Kong, HashKey recently announced that it has completed the product functionality and related infrastructure support for the potential spot Bitcoin ETF in Hong Kong. Adrian Wan, CEO of HashKey Exchange, stated that the fund issuer collaborating with HashKey has completed the development of its spot Bitcoin ETF, and HashKey will provide infrastructure support for the ETF, which has now entered the "integration and functional testing" stage.
Furthermore, HashKey will personally participate in the issuance and management of the Bitcoin spot ETF. On April 11, HashKey Capital announced that it has obtained an exemption from the Securities and Futures Commission of Hong Kong for the existing asset management (Type 9) license of HashKey Capital Limited, which limits the qualified investor clause. In the future, HashKey Capital Limited will be able to provide fund product services related to virtual assets to retail investors (specific products subject to final approval by the Securities and Futures Commission of Hong Kong). The upgraded license for HashKey Capital brings new product categories and will also enable it to reach a larger group of investors.
V. Conclusion
In the past, Hong Kong's actions and layout in the Web3 field have always been slow, which has led to dissatisfaction among the cryptocurrency industry and financial practitioners with the development of the virtual asset industry in Hong Kong. However, the launch of the Bitcoin spot ETF and Ethereum spot ETF is expected to change this passive situation, expanding the incremental market and bridging the gap between traditional finance and virtual assets, thereby achieving a greater market win-win situation.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
