Hong Kong Set to Launch Bitcoin and Ethereum Spot ETFs with In-Kind Redemption Mechanism
Crypto News – The eagerly awaited Bitcoin and Ethereum spot ETFs in Hong Kong are poised to commence trading on April 30, employing an in-kind redemption mechanism. This development, as reported by Bloomberg, citing a spokesperson from HashKey, marks a significant milestone in the crypto investment landscape.
Scheduled for launch on April 30, these spot Bitcoin and Ethereum ETFs will introduce an in-kind subscription and redemption mechanism. This approach facilitates the exchange of underlying assets for ETF units and vice versa, diverging from the cash redemption model employed by US funds.
In a recent announcement, the Hong Kong markets regulator cleared the path for four firms – China Asset Management, Bosera Capital, HashKey Capital, and Harvest Global – to proceed with their planned launch of spot Bitcoin and Ethereum ETFs. This regulatory approval signals a growing acceptance of cryptocurrency investment products in traditional financial markets.
Anticipation surrounds the potential market demand for these ETFs, with some analysts forecasting up to $25 billion worth of demand. However, challenges remain, particularly regarding accessibility for mainland Chinese investors due to existing restrictions on crypto investments and the fee structures of these smaller issuers.
In contrast to their US counterparts, which have witnessed unprecedented demand since their January launch, Hong Kong-based issuers may face hurdles in catching up. Nonetheless, they are expected to lead the way in spot Ethereum ETFs, as the outlook for a similar product in the US appears uncertain.
According to analysts monitoring the market closely, the probability of spot Ethereum ETF applications gaining approval by the May 23 deadline stands at just 25%. Despite amendments to applications by prospective issuers like BlackRock, regulatory hurdles continue to loom large, casting doubts on the prospects of a spot Ethereum ETF in the US.
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