The Hong Kong Securities and Futures Commission (SFC) has officially approved the first batch of spot Bitcoin and Ethereum ETFs, marking a pivotal milestone in the region’s financial evolution. This landmark decision positions Hong Kong as a leading hub for virtual asset innovation in Asia and opens new investment pathways for both retail and institutional investors.
The approved products come from three major asset managers: China Asset Management (Hong Kong), Bosera Funds (International), and Harvest Fund Management (International). These ETFs are set to launch by the end of April 2024, with trading expected to begin on the Hong Kong Stock Exchange shortly after approval.
This development not only enhances market accessibility but also underscores Hong Kong’s commitment to building a regulated, transparent, and future-ready digital asset ecosystem.
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The Launch of Asia’s First Spot Crypto ETFs
China Asset Management (Hong Kong) announced that its China AMC Bitcoin ETF and China AMC Ethereum ETF have received SFC approval, with an initial offering date scheduled for April 29, 2024, and listing on April 30. These will be among the first spot crypto ETFs available to investors in Asia.
Simultaneously, Bosera Funds (International), in collaboration with HashKey Capital, has secured approval for two spot virtual asset ETFs tracking Bitcoin and Ethereum. Harvest Fund Management (International) also received green lights for its Harvest Spot Bitcoin ETF and Harvest Spot Ethereum ETF.
These ETFs aim to deliver investment returns closely aligned with the spot prices of Bitcoin and Ethereum—before fees and expenses—offering a regulated alternative to direct cryptocurrency ownership.
For industry leaders, this marks more than just a product launch; it’s a transformative step toward integrating digital assets into mainstream finance.
“This reflects Hong Kong’s institutional strengths as an international financial center and demonstrates foresight in financial technology innovation,” said Han Tongli, CEO and CIO of Harvest Fund Management (International).
He added that these ETFs represent a breakthrough in enabling physical creation and redemption mechanisms using actual Bitcoin and Ethereum—setting a new standard for transparency, efficiency, and regulatory compliance.
Why These ETFs Matter: Bridging Traditional Finance and Digital Assets
Bitcoin is widely regarded as “digital gold,” while Ethereum powers smart contracts and decentralized applications—the backbone of Web3 innovation. By launching regulated ETFs tied directly to their spot prices, Hong Kong provides a secure gateway for traditional investors to gain exposure without managing private keys or navigating unregulated exchanges.
According to Zhu Haokang, Head of Digital Asset & Family Wealth Management at China Asset Management (Hong Kong), these ETFs offer a safe, efficient, and convenient tool for allocating capital to digital assets.
“Compared to holding physical crypto, these ETFs are exchange-listed, regulated, professionally managed, and backed by licensed custodians. Combined with the world’s first physical creation/redemption mechanism, they’re poised to attract investors looking to convert their holdings into compliant financial instruments.”
HashKey Capital emphasized that this approval builds a bridge between traditional finance and virtual assets, significantly expanding access for retail and institutional participants alike.
Competitive Fee Structures and Market Differentiation
One of the most critical factors shaping investor interest will be cost efficiency. Each fund has adopted a distinct fee strategy:
- Harvest Fund: Charges 0.3% management fee, with a full waiver for the first six months.
- Bosera Funds: 0.6% annual fee, with a four-month fee exemption post-launch.
- China Asset Management (Hong Kong): 0.99% management fee—potentially used to incentivize distributor networks through rebates.
Rebecca Sin, ETF Analyst at Bloomberg Intelligence, noted that competition among issuers is likely to be fierce due to differences in pricing models, distribution strategies, and even stock ticker selection.
“Each ETF uses different market makers and virtual asset platforms, which may offer slight advantages at launch. Investors should carefully assess the total cost of ownership—not just headline fees.”
For example, Bosera’s choice of tickers 3008.HK and 3009.HK includes the number 8, considered lucky in Chinese culture—a subtle psychological nudge that could influence investor recall and capital flows.
Physical Creation & Redemption: A Game-Changer for Market Efficiency
A key innovation across these ETFs is the physical creation and redemption mechanism, allowing investors to exchange actual Bitcoin or Ethereum for ETF shares—and vice versa.
This feature brings several benefits:
- Reduces tracking error by aligning fund holdings with real-time market prices
- Enhances liquidity through arbitrage opportunities
- Lowers counterparty risk compared to futures-based alternatives
Harvest Fund highlighted that its solution—backed by Bank of China International (UK) Trustees Limited) and OSL Digital Securities, Hong Kong’s first licensed digital asset platform—addresses structural flaws seen in U.S.-listed futures-based ETFs, such as:
- High margin requirements
- Contango and roll yield losses
- Persistent price premiums due to short-selling constraints
By contrast, spot-backed ETFs provide more accurate price exposure and improved capital efficiency.
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Expanding Access: How Can Investors Participate?
Investors can subscribe using either cash or cryptocurrency, though participation requires a Hong Kong brokerage account. At present, there are no confirmed plans to include these ETFs in the Stock Connect program, limiting immediate access for mainland Chinese investors.
Nonetheless, analysts expect strong demand from international funds seeking regulated exposure to top-tier digital assets.
Bosera International emphasized its partnership with HashKey Capital leverages expertise in both traditional finance and crypto ecosystems to deliver secure, compliant access to Bitcoin and Ethereum markets.
Meanwhile, China Asset Management (Hong Kong) is aligning its strategy with Hong Kong’s broader push toward Web3 development—aiming to meet growing client demand for innovative asset classes through differentiated product design.
FAQs: Your Questions About Hong Kong’s New Crypto ETFs
Q: What are spot Bitcoin and Ethereum ETFs?
A: These are exchange-traded funds that hold actual Bitcoin or Ethereum reserves, aiming to mirror their real-time market prices. Unlike futures-based ETFs, they avoid roll costs and better reflect current valuations.
Q: Can I buy these ETFs from outside Hong Kong?
A: Yes—if you have access to a Hong Kong brokerage account. However, availability depends on your broker’s offerings and regional regulations.
Q: Are these ETFs safer than holding crypto directly?
A: For many investors, yes. They eliminate self-custody risks (like lost keys), operate under SFC oversight, use licensed custodians like OSL, and offer familiar trading interfaces via stock exchanges.
Q: Do these ETFs pay dividends?
A: No. Since Bitcoin and Ethereum do not generate income like stocks or bonds, these ETFs do not distribute dividends. Returns are based solely on price appreciation.
Q: Will these ETFs be included in major indices?
A: Not initially. But as assets under management grow and trading volumes stabilize, inclusion in niche digital asset indices is possible within 12–24 months.
Q: Is there a minimum investment amount?
A: Minimums vary by platform and share class. Retail tranches typically allow small-unit purchases similar to other ETFs listed in HKD.
Looking Ahead: A Catalyst for Asia’s Digital Asset Future
The approval of spot crypto ETFs signals Hong Kong’s ambition to become a premier virtual asset financial center. With clear regulatory frameworks, institutional-grade infrastructure, and innovative product designs, the city is well-positioned to attract global capital.
As competition intensifies among issuers, expect further innovations in fee structures, liquidity provisioning, and investor education.
For those seeking regulated exposure to digital assets, Hong Kong’s new generation of crypto ETFs offers a compelling entry point—combining the best of traditional finance with the transformative potential of blockchain technology.
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