W Power 2024

Hong Kong grants approval for first Bitcoin ETFs

Hong Kong's Bitcoin ETFs will launch through an in-kind model that enables new ETF shares to be issued directly with BTC

Shashank Bhardwaj
Published: Apr 16, 2024 02:52:07 PM IST

Hong Kong grants approval for first Bitcoin ETFsImage: Shutterstock

On April 15, Hong Kong’s Securities and Future Commission (SFC) approved three spot Bitcoin and Ether exchange-traded funds (ETFs) from Harvest Global Investments, China Asset Management, and a partnership between Hashkey and Bosera Asset Management. The Stock Exchange of Hong Kong is now finalising listing procedures and related arrangements, a step expected to take approximately two weeks.

Based on the situation yesterday (April 15), Eric Balchunas, an ETF analyst at Bloomberg, expressed scepticism about the potential inflows of these ETFs. He tweeted on X (formerly Twitter) that they may attract less investment than some anticipate.

Balchunas said, "Don't expect a lot of flows. (I saw one estimate of $25 billion, that's insane). We think they'll be lucky to get $500 million."

He explains his predictions by stating that the Hong Kong ETF market is "tiny" compared to countries like the United States. Balchunas also noted that the three prospective ETF issuers in Hong Kong are significantly smaller than major asset management giants like BlackRock.

In a follow-up post on X, Balchunas tweeted, "U.S. spot bitcoin ETFs have more assets than the entire HK ETF market.”

On the other hand, Elja Boom, the co-founder of Okse, tweeted expressing optimism, stating, “This is a massive boost for the crypto economy, as it'll help bring a huge amount of Chinese money into crypto. Hong Kong approving BTC and ETH,  ETF will also bring a lot of attention to Chinese narrative tokens”. However, the extent of the inflows remains to be seen.

Notably, the approved spot Bitcoin and Ether ETFs will launch through an in-kind model that enables new ETF shares to be issued directly with BTC and ETH.   

Regarding the U.S. Bitcoin ETFs, as of April 15, the top 10 entities holding Bitcoin ETFs held a combined total of 843,420 BTC, which is 4.016% of the total 21 million Bitcoin supply.

Grayscale’s GBTC leads the pack with 314,145 BTC, representing 1.496% of the total Bitcoin supply. iShares Bitcoin Trust, overseen by BlackRock, holds 270,976 BTC, comprising 1.29% of the total supply. Also, the Fidelity Wise Origin Bitcoin Fund (FBTC) holds 151,853 BTC, representing 0.723% of the total supply.

Notably, last month, Mudrex, a cryptocurrency investment platform, launched US Bitcoin Spot ETFs for both institutional and retail investors in India. After KYC, users can invest a minimum of $5,000 and a maximum of $250,000. They can choose individual ETFs, create personalised baskets, or select pre-listed options based on market cap.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash

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