Hong Kong is now jumping on the cryptocurrency bandwagon and will list several cryptocurrency exchange-traded funds (ETFs ) based on the more successful attempts in the US. Hong Kong will pursue employment of all its means so that tier 1 level cities will start to show progress in becoming a digital asset hub.
Hong Kong’s crypto ETF push
Some of the top fund managers in China are currently finalizing the establishment of spot Bitcoin and Ether market ETFS. The precondition for them to begin trading is already in place, and they are expected to start this month.
They are the latest endeavors to make Hong Kong the world’s leading regulated center in Virtual Assets, part of its broader strategy of revamping its image as a trendy financial hub in the face of recent challenges.
Upcoming tokens are anticipated to attract different target groups, including capital assets at Hong Kong stock exchanges, digital currency exchanges, and other market players in the Asia-Pacific region. Analysts estimate that this fund could accrue an asset base of one billion or more by the end of the current fiscal year.
However, the US has already experienced success with Bitcoin funds pushed by key players like BlackRock Inc. and Fidelity Investments, which have attracted global attention and large investment flows and hence might overshadow the local ones such as Harvest Global Investments Ltd, a local unit of China Asset Management and a partnership between HashKey Capital Ltd. and Bosera Asset Management (International) Co. that might be not big enough names compared.
Regulatory landscape for crypto ETFs
While graphically, Hong Kong’s legal structure has certain differences. The United States Federal Securities Commission (SEC) initially blocked ETFs on Bitcoin holdings. Even though it issued new regulations allowing some indirect investment into Bitcoin, it remains consistently cautious about the crypto market, especially after Bitcoin and other cryptos have tanked in the last few months. The likelihood of fraud seems to be on the rise. However, India has banned the trading of such digital assets. (According to the issuers, Hong Kong authorities gave funds based on spot Bitcoin and Ether initial go-ahead.)
In addition, CIEXEC will adopt an in-kind subscription and redemption mechanism, which enables the exchange of assets for ETF units, unlike the cash redemption model commonly used for US funds.
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