As the United States ponders stricter regulations that might label Ethereum a security, Hong Kong ETF issuers aren’t breaking a sweat. They’re confident that U.S. regulatory shifts won’t rattle the strong framework established for crypto investments in Hong Kong.
Optimism on the Eve of Launch
On the cusp of releasing new spot crypto ETFs in Hong Kong, leaders from the financial sector convened at a press conference to showcase their readiness and optimism. Zhu Haokang of China Asset Management and Wayne Huang from OSL Digital Securities were front and center, fielding questions about these novel investment products.
Zhu Haokang, steering the digital asset management and family wealth division at China Asset Management (Hong Kong), alongside Wayne Huang, who heads the OSL ETF and custody business, delivered confident projections about the initial launch. Zhu proclaimed a groundbreaking start for Hong Kong’s virtual asset spot ETF, expecting to surpass the $125 million mark set by U.S. Bitcoin spot ETF issuers earlier this year.
Huang added that the Hong Kong Stock Exchange would announce significant first-day fund-raising achievements the following morning, indicating that the figures already outpaced those of their U.S. counterparts.
Distinct Features and Broad Interest
Zhu highlighted the unique aspects of the Spot China Bitcoin ETF and Spot China Ethereum ETF compared to other similar products. Notably, these ETFs allow both spot and physical subscriptions and redemptions—a feature not available in the U.S. Additionally, they are the only ETFs that provide counters in Hong Kong dollars, U.S. dollars, and RMB, along with options for both listed and unlisted shares.
Investor interest isn’t just local. It spans globally. Zhu noted significant participation from Bitcoin miners using their holdings to buy ETF shares directly. Investors from regions without their own ETFs, like Singapore and the Middle East, along with family offices across Asia and overseas, have shown keen interest, drawn by the advantages of physical subscriptions and trading hours aligned with Asian markets.
Expanding the Brokerage Ecosystem
Wayne Huang outlined the broader engagement of brokerage firms with the new ETFs. Beyond Victory Securities, Huaying Securities and others are gearing up to handle physical subscriptions, with more expected to join in May.
Huang explained the rigorous anti-money laundering measures in place, ensuring that only verified wallets could engage in transactions, potentially even those held by other exchanges, provided they meet OSL’s stringent standards.
“We will perform a whitelist verification on the wallet that is about to transfer money to prove that this wallet is held and controlled by the investor. Second, we will verify the investment. The user’s private wallet must be screened to see if there are any suspicious transactions in the wallet’s past dozens of transactions on the chain. Only wallets that have passed the whitelist verification can allow him to transfer money.“
Despite potential shifts in U.S. regulations regarding Ethereum, Huang was clear that such changes would not sway the Hong Kong Securities Regulatory Commission’s independent standards and procedures. He detailed the lengthy and meticulous process of compliance and due diligence required to list new virtual assets, which so far includes only Bitcoin and Ethereum for retail trading in Hong Kong.
Zhu closed the session by discussing the broader impacts of cryptocurrency ETFs on market prices and liquidity, suggesting that these products could catalyze compliance, expand funding channels, and offer new arbitrage opportunities. He also defended the higher fees charged by China Asset Management Hong Kong by highlighting the flexibility, complexity, and innovative nature of their ETF offerings.
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