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Summary
Three Hong Kong-based issuers have received approval to launch spot exchange-traded funds (ETFs) trading Bitcoin and Ethereum, marking a significant development in the region’s crypto investment landscape.
Introduction
In contrast to the cash-create redemption approach, these ETFs will allow issuers to use assets other than cash for creating new ETF shares, following conditional authorization by the Hong Kong Securities and Futures Commission (SFC).
Main Points
At least three offshore Chinese asset managers, including Harvest Fund Management, Bosera Asset Management, and China Asset Management, are set to introduce spot Bitcoin and Ethereum ETFs in Hong Kong. Bosera will collaborate with HashKey Capital, with OSL Digital Securities serving as a sub-custodian for ChinaAMC and Harvest.
The in-kind creation model for these ETFs will enable the issuance of new ETF shares using Bitcoin and Ethereum, a departure from the cash-create redemption approach. This model offers flexibility to issuers in utilizing various assets for creating ETF shares, unlike the restriction to cash-only in the US market.
Following the SFC’s clearance, the Hong Kong Stock Exchange (HKEX) will require approximately two weeks to finalize listing processes and other necessary arrangements, signaling the imminent launch of these groundbreaking ETFs in the region.
Conclusion
The approval of spot Bitcoin and Ethereum ETFs in Hong Kong reflects a progressive approach towards crypto investment opportunities, offering investors a new avenue to participate in the digital asset market. This development aligns with the growing interest in cryptocurrencies and highlights the evolving regulatory landscape in the region.
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