Hong Kong's Securities and Futures Commission has officially approved the first spot Bitcoin and Ether ETFs, which will begin trading on April 30. This marks a significant milestone in the city's cryptocurrency market evolution.

Hong Kong Greenlights First Spot Bitcoin and Ether ETFs, Set to Trade April 30

Hong Kong's financial regulator has cleared the first batch of spot Bitcoin and Ether ETFs for trading. The first wave of spot Bitcoin and Ether exchange-traded funds (ETFs) has been formally permitted to begin trading in Hong Kong on April 30.

On April 24, Hong Kong's Securities and Futures Commission (SFC) announced the official acceptance of the first batch of spot Bitcoin and Ether ETFs, according to a press release shared with Cointelegraph.

The first batch of approved Hong Kong-based ETFs includes China Asset Management's (ChinaAMC) Bitcoin and Ether-based ETFs, which will begin trading on April 30.

According to Thomas Zhu, ChinaAMC's head of digital assets and family office operations, the ETFs would provide retail and institutional investors a safer and more convenient option to participate in the underlying digital assets inside a regulated framework.

“The in-kind feature also attracts coin holders by offering the ease of converting coins to fully regulated ETFs managed by professional fund managers and regulated custodians. With the growing adoption of ETFs in institutional asset allocation and retail trading in Hong Kong, we expect robust demand for our offerings,” he wrote in an official statement.

According to an April 2 story, Hong Kong will launch three Bitcoin and three Ether-based spot Bitcoin ETFs on April 30.

Unlike the cash-creation methodology used by US spot Bitcoin ETFs, Hong Kong intends to offer in-kind creation models for ETFs, allowing the formation of new ETF shares using BTC and ETH.

Hong Kong's In-Kind ETF Mechanism Could Spark AUM Growth and Trigger Fee Competition

According to a research paper by Bloomberg ETF analyst Rebecca Sin, posted in a March 26 X post by Eric Balchunas, Hong Kong's in-kind ETF origination mechanism has the potential to significantly raise assets under management (AUM) and trading activity for these products.

“Hong Kong is aiming for in-kind creation of the ETF, unlike the US, where the transaction is cash only — in the US, it’s cash in, Bitcoin ETF out, while Hong Kong aims for Bitcoin in, ETF out. This could be an opportunity for the market,” the research revealed.

According to Bloomberg ETF analyst James Seyffart's April 24 article, introducing the first ETFs in Hong Kong may push issuers to compete to give the lowest fees to users.

“A potential fee war could break out in Hong Kong over these Bitcoin and Ethereum ETFs. Harvest coming in hot with a full fee waiver and the lowest fee at 0.3% after waiver,” he penned.

Eric Balchunas, senior ETF analyst at Bloomberg, said the fees for the initial ETFs are already lower than projected, which is an encouraging indication, as stated in an April 24 X post.

“Fees are 30bps, 60bps, and 99bps which is on average lower than we thought, good sign,” Eric wrote.

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