Hong Kong’s financial market is set to witness fierce competition among newly approved Bitcoin and Ethereum exchange-traded products (ETFs) in terms of fees. These licensed funds, scheduled to start trading on April 30, 2024, have received approval from the SFC (Securities and Futures Commission). The three approved ETFs are offered by China AMC, Harvest Global Investments, and a joint venture of Bosera and HashKey Capital. All these funds will be held by the Bank of China International-Prudential Trustee Limited (BOCI-Prudential) as the custodian. Their aim is to replicate the performance of Bitcoin and Ethereum, based on the CME CF Bitcoin Reference Rate and the CME CF Ether-Dollar Reference Rate, respectively.
The ETFs have different pricing structures for their management fees, designed to attract investors from various market segments. China AMC has announced a management fee of 0.99%, whereas Bosera and HashKey charge a fee of 0.6%. Harvest Global Investments, on the other hand, offers a fee waiver for the first six months and subsequently charges a significantly lower fee of 0.3%. This aggressive pricing strategy by Harvest Global Investments could lead to intense competition among issuers vying for a significant share in Hong Kong’s emerging digital asset market.
James Seyffart, an analyst at Bloomberg Intelligence, has highlighted the possibility of price competition within the industry. He emphasized the impact that Harvest’s pricing strategy could have on Hong Kong’s digital asset pricing norms. These ETFs are the first of their kind to be introduced in the neighboring Asian market, which is open to innovative financial products.
Zhu, the Head of Digital Assets and Family Office Business at China AMC, has stated that these ETFs provide a secure and efficient investment channel for both retail and institutional clients. They offer a regulated environment for the community to engage with virtual assets. Zhu also highlighted the “in-kind” nature of these ETFs, which allows coin holders to easily convert their assets into regulated ETFs.
These products align with Hong Kong’s overall goal of establishing a thriving web3 network. The launch of these ETFs is expected to lead to the development of new strategies in the digital asset management space and set benchmarks for the performance of popular cryptocurrencies in regulated investment formats.
