Hong Kong Gives Initial Bitcoin, Ether ETF Approval, Issuers Say

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Bloomberg Apr 16 03:31 · 77.9k Views

Several asset managers in Hong Kong have been given conditional approvals to launch spot-Bitcoin and Ether exchange-traded funds, according to the firms. Rebecca Sin reports on Bloomberg Television.

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Transcript

  • 00:00 Talk us through who got approved for this because actually some of the names that came out
  • 00:04 perhaps
  • 00:05 weren't who could have been expected.
  • 00:08 So in Hong Kong there were three ETF issuers that got approved and to your point they were not the big ones that we had expected.
  • 00:15 So the three that got mentioned are Becerra, China AMC and Harvest and split across these three ETF issuer Becerra has just six ETF with 40 million in assets under management.
  • 00:25 China AMC is the largest with 15 ETF and 3.6 million
  • 00:30 and then Harvest just has three ETF and 10 million in assets.
  • 00:33 So
  • 00:34 they are not your usual suspect.
  • 00:36 But it is interesting because ultimately this is
  • 00:38 the first spot Bitcoin in ether ETF to be launched in Hong Kong.
  • 00:44 What's the significance of these conditional approvals?
  • 00:48 So what is interesting here is ultimately Hong Kong is trying to be the crypto or virtual asset hub of Asia Pacific.
  • 00:55 And what Hong Kong has done to differentiate themselves is they are allowing in kind creation and redemption.
  • 01:01 And what this means is ultimately if you are a holder of Bitcoin or ether, you can swap that into an ETF.
  • 01:08 In the
  • 01:09 US, they have only allowed cash creation and redemption.
  • 01:12 And what this means is ultimately you
  • 01:14 provide cash and in return you get a Bitcoin ETF.
  • 01:18 So Hong Kong is taking a little bit of a different play where they're going to allow Bitcoin or ether,
  • 01:23 a physical transaction of in kind creation.
  • 01:25 So if you're a holder of Bitcoin or ether, you can then swap that into
  • 01:29 an ETF.
  • 01:30 And so this is a really significant event because ultimately it can attract different players,
  • 01:35 people that are already holding these virtual assets and cryptocurrencies, they can potentially swap into an ETF format if they want.
  • 01:43 There's a lot of question marks over
  • 01:44 the AUM that we're going to be seeing here, especially given the huge inflows we've seen into the US
  • 01:50 Do you think we can sort of match that level or reach anything near it?
  • 01:52 And also, is there a way for mainland Chinese investors to express their interest in these products?
  • 01:58 So I think if we look at the Hong Kong market, Hong Kong has roughly 51 billion in assets under management.
  • 02:03 And if we look at the flows that we've seen in the
  • 02:06 US, we've seen roughly 1% of assets into the US go into
  • 02:09 crypto assets and virtual assets in the US And so if we replicate that in Hong Kong,
  • 02:14 I think we can see as much as 1 billion going into these ether
  • 02:18 and Bitcoin ETF
  • 02:19 in Hong Kong or in Asia Pacific.
  • 02:21 There's already roughly 250 million in assets in Hong Kong.
  • 02:25 We already have futures based,
  • 02:26 so CSOP and Samsung has a
  • 02:29 Bitcoin and ether futures base and there's roughly 200 million in that.
  • 02:33 So I think there is potential in Hong Kong, each of these ETF could gather as much as 100 million.
  • 02:38 And so I think in terms of assets, 1 billion is the target that we're expecting
  • 02:42 and there is a lot of demand from Mainland China.
  • 02:44 But I don't think this product will be added on ETF Connect anytime soon.
  • 02:48 There's some concerns around, you know, QD quota and what's going to happen, but I don't think we're going to get demand right.