Hong Kong's Spot Bitcoin ETF Likely to Launch Next Week

Hong Kong plans to introduce crypto ETFs focusing on Bitcoin and Ether, with trading expected as early as next week.
The initiative is part of Hong Kong’s strategy to restore its financial centre status and establish itself as a global hub for digital assets.
Victory Securities has set ETF fees for primary market transactions between 0.5% and 1%, with different rates for secondary market trades.

As reported earlier Hong Kong is set to launch a series of crypto exchange-traded funds (ETFs), mirroring similar initiatives in the United States.

This is seen as part of its efforts to establish itself as a global digital asset hub. As Bloomberg reports, several leading Chinese asset managers are now nearing the completion of their preparations for these ETFs, which will focus on Bitcoin and Ether, and are expected to start trading by the end of April.

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The success of these ETFs – potentially attracting US$1bn (AU$1.5bn) in assets within two years according to Bloomberg Intelligence – will be a key indicator of Hong Kong’s progress in becoming a competitive market for virtual assets, alongside other aspiring hubs like Singapore and Dubai.

Victory Securities Reveals ETF Fees

Over the weekend, Hong Kong-based Victory Securities outlined its fee structure for the newly approved Bitcoin and Ether ETFs in the region.

Exclusive: Victory Securities internally released the Hong Kong Bitcoin Ethereum spot ETF subscription guide and disclosed its charging standards. Hong Kong securities firms are selling to potential clients.
The original text of the picture is in Chinese, using Google Translate… pic.twitter.com/oCqlU6EoSm
— Wu Blockchain (@WuBlockchain) April 20, 2024

Investors purchasing ETF shares in the primary market will be subject to fees ranging from 0.5% to 1% of the transaction value, with a minimum fee of US$850 (AU$1300).

For transactions on the secondary market, the fees are set at 0.15% for online trades and 0.25% for trades conducted over the phone.

Curb Your Enthusiasm

While the Spot Bitcoin ETF news out of Hong Kong is certainly good news for Bitcoin and crypto in general, it isn’t necessarily earth-shattering as Bloomberg’s senior ETF analyst Eric Balchunas said online.

Latest on HK spot Bitcoin ETFs: They have been approved to exist but not launch (yet). Rumor has it launching next wk so to not compete w Dubai conf. Don’t expect a lot of flows (I saw one estimate of $25b that’s insane). We think they’ll be lucky to get $500m. Here’s why:
1. HK…
— Eric Balchunas (@EricBalchunas) April 15, 2024

Although they expect the funds to bring in around US$1bn in the first two years of trading – far less than some had expected – there are a few other factors to be considered.

First, Hong Kong is a small market and Chinese investors will most likely not have access to these products – although Balchunas notes there are alternate routes, but they may be too cumbersome for the average investor.

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Additionally, the analyst says the HK market and the current would-be issuers are small, and their fees high in comparison to their US counterparts.

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