Hong Kong Bitcoin and Ethereum ETFs set to launch on Hong Kong Stock Exchange on April 29

The highly anticipated Hong Kong Bitcoin and Ethereum exchange-traded funds (ETFs) are set to go live on the Hong Kong Stock Exchange on Tuesday, April 30. Mainland Chinese investors are not allowed to invest in the products, except for those with residence permits. Officials are expecting a first-day issuance of $300 million, surpassing the $125 million seen in the US on January 11.

The products will offer in-kind redemptions and subscriptions for Bitcoin ETFs, as well as ETH ETFs, ahead of the US. Hong Kong’s ETFs will have spot and physical subscriptions and redemptions, with the only ETF offering Hong Kong Dollar, US Dollar, and RMB pairs. The products will be open for trading during Asian trading hours, attracting interest from American investors.

One key differentiator for Hong Kong’s ETFs is the ability for Bitcoin miners to use their holdings to purchase the ETFs directly. The products are expected to reach regions like Singapore and the Middle East, where ETFs have not yet been issued. Family offices across Asia and overseas have also shown interest in the spot crypto ETFs.

Currently, only three securities firms in Hong Kong can conduct physical subscriptions, with more expected to join in May. Investors will need to go through an anti-money laundering process for physical subscriptions, including whitelist verification and investment verification.

Mainland Chinese investors are not allowed to invest in the ETFs, which are accessible to qualified investors, institutional investors, retail investors, and international investors that meet the regulations. The impact of the US SEC deeming Ethereum a security will not affect the decision-making of the Hong Kong Securities Regulatory Commission.

There is also the possibility of other virtual asset ETFs being introduced in the future, pending approval from the China Securities Regulatory Commission. Once a specific liquidity threshold is reached, the asset will be accepted as an ETF for retail trading.