Hong Kong is set to become a leader with its new bitcoin and Ether exchange-traded funds (ETFs), but how can they compete with their American peers, which have attracted more than $28 billion in the first three months? Eric Balchunas, Bloomberg ETF analyst, has twitter.com/EricBalchunas/status/1780567960735686922″ target=”_blank” rel=”noopener nofollow”>updated its projections, now estimating that these ETFs could attract up to $1 billion in assets under management within the first two years of operation, doubling its previous forecast of $500 million.
Why Hong Kong Spot bitcoin ETFs Will Lag Their US Peers
This optimistic forecast is tempered by certain regulatory challenges, which particularly affect potential investors from mainland China. As Balchunas detailed via
This statement was based on insights from Bloomberg's Rebecca Sin, who emphasized that while mainland Chinese retail investors could theoretically use their $50,000 annual remittance quota to invest in these ETFs, this channel remains largely underexploited due to complexities. regulations and practices. For institutional investors, the outlook is even tighter, with the Qualified Domestic Institutional Investor (QDII) quota for virtual asset ETFs unlikely to be approved given the current regulatory environment.
Despite these limitations, the introduction of bitcoin and Ether spot ETFs represents an important milestone for Hong Kong financial markets. Sin further clarified the broader potential impact, noting that “Hong Kong bitcoin and Ether spot ETFs could raise up to $1 billion in assets under management.” However, achieving this goal largely depends on the pace of infrastructure improvements and the expansion of the ecosystem that supports these digital assets.”
Currently, total assets under management of bitcoin ETFs in the Asia-Pacific region amount to $250 million, spread across five funds based in Hong Kong and Australia. The CSOP bitcoin Futures ETF (3066 HK) is currently the largest bitcoin fund in Hong Kong, launching in late 2022 with $121 million in assets under management.
Management fees for the new ETFs are expected to range between 1% and 2%. For comparison, CSOP's existing bitcoin futures ETF and Ether futures ETF charge a 2% management fee plus an estimated additional 2% in other expenses. In contrast, Samsung's bitcoin Futures ETF offers a lower fee structure of 0.95%. The fee structure is a critical element for potential investors as it influences both retail and institutional participation in these financial products.
Eric Balchunas also highlighted the broader implications for Hong Kong's role in the global ETF market. “Now, some good news regarding Hong Kong, our asset estimate is now $1 billion in the first two years (which is healthy in my opinion, but still nowhere near $25 billion). dollars that some have said), but a lot depends on improving infrastructure. We also believe this helps Hong Kong as an ETF leader in the Asia region,” he tweeted.
This outlook underscores Hong Kong's strategic positioning as a thriving hub for cryptocurrency investments in Asia, despite strict regulations in adjacent markets such as mainland China. With trading set to begin on April 30, the financial community is watching Hong Kong closely as these ETFs launch.
At the time of publication, btc was trading at $62,401.
Featured image created with DALL·E, chart from TradingView.com
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