Tech
Hong Kong Bitcoin and Ether ETFs Seen Attractive to Asian Buyers, But Are ‘Child’s Play’ Compared to US Market Size
“We can expect a good level of interest, especially with other Asian jurisdictions staying away from domestic issuance of spot bitcoin ETFs for now,” said Angela Ang, senior policy advisor at blockchain analytics firm TRM Labs.
U.S. spot bitcoin ETFs, which were approved in January, are also available worldwide, but many Asian investors may prefer to avoid the hurdle of opening a U.S. investment account and paying capital gains tax on the country, said Michael Wong, a partner at law firm Dechert LLP in Hong Kong.
“It’s just more convenient for Hong Kong investors or probably Asian investors in general, who don’t want to open a brokerage account in the U.S.,” Wong said.
Just having to fill out U.S. tax forms could be a deterrent to some investors seeking exposure to bitcoin, according to Wong, who also noted that Hong Kong does not tax capital gains.
Hong Kong’s impending approval of bitcoin and ether ETFs is also a “milestone for the digital asset industry overall” as it “creates an additional regulated avenue for price exposure to the asset class.” assets with the ability to trade within the Asian time zone”. said Chengyi Ong, head of APAC policy at blockchain research firm Chainalysis.
Ong noted that demand for price exposure to virtual assets is strong in Asia, which accounts for $791 billion of the $1.17 trillion worth of bitcoin traded in February this year, according to data from Crypto News and The Block . North American investors traded $113 billion in bitcoin that month.
Ultimately, though, demand for Hong Kong products will depend on the size of the local market, tariffs charged and similar factors, Ong said.
“The expense ratio will definitely be something investors will look at,” Dechert’s Wong said. “If you have a comparable or competitive expense ratio for [Hong Kong’s spot crypto] ETFs, so I’m sure they will be very attractive to many investors.”
Others were more dismissive of the new products. Bloomberg senior ETF analyst Eric Balchunas said X, formerly Twitter, that the offering is “a no-brainer” compared to similar products in the US because Hong Kong is a relatively “small” market. “Don’t expect many streams,” she wrote.
According to the regulator, firms planning to launch cryptocurrency spot ETFs in Hong Kong should now work to meet other requirements before offering them, such as applying to list them on the local exchange, pending final approval from the SFC. Wong estimates that ETFs could be launched by June.