Hong Kong Prepares for Highly Anticipated Cryptocurrency ETF Debut
Hong Kong is gearing up for the highly anticipated debut of its cryptocurrency exchange-traded funds (ETFs) tomorrow, with projections indicating a potential record-breaking first-day trading volume. The ETFs, set to be launched by three Chinese firms – China Asset Management, Bosera Asset Management, and Harvest Global Investments – via their Hong Kong subsidiaries, are expected to attract an inflow scale between $200-300 million.
Zhu Haokang, head of digital asset management and family wealth at China Asset Management, predicts that Hong Kong’s virtual asset spot ETF trading volume will surpass that of the United States. The 10 US Bitcoin spot ETF issuers saw an inflow volume of $125 million on January 10, a figure that Hong Kong is poised to exceed with its three issuers.
The difference between Hong Kong’s spot crypto ETFs and their American counterparts lies in their redemption method. While US spot Bitcoin ETFs are cash-created, Hong Kong’s ETFs will be in-kind created, allowing intermediaries to provide issuers with actual cryptocurrencies like Bitcoin for new ETF shares.
Bitcoin expert Willy Woo emphasized the significance of the Asian market in the crypto industry, noting that it has more users than the US and Europe combined. Despite this potential, Chinese investment in digital assets is restricted, posing a challenge for Hong Kong’s ETFs.
Initial estimates suggested that Hong Kong’s spot Bitcoin ETFs could attract $25 billion, but Bloomberg analyst Eric Balchunas revised this down to $1 billion, citing the need for improved infrastructure to reach this adjusted target quickly. Nevertheless, even $1 billion would be a significant milestone for the Hong Kong Bitcoin and Ethereum ETFs.
As the launch date approaches, all eyes are on Hong Kong to see if it will indeed break US ETF records and emerge as a leading ETF issuer in terms of first-day trading volume. Stay tuned for updates on this groundbreaking development in the world of cryptocurrency trading.
