Hong Kong Bitcoin ETFs Offers These Advantages Over The US ETFs

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As a researcher with a background in financial markets and experience in following the crypto space, I am excited about the recent development of Bitcoin ETFs in Hong Kong. This new market offers unique advantages that distinguish it from the US Bitcoin ETFs.

After a prolonged period of anticipation, Hong Kong’s Bitcoin exchange-traded funds (ETFs) have commenced trading, generating excitement amongst investors. Notably, this development unfolds as US Bitcoin ETFs encounter weekly net redemptions. Financial analysts are emphasizing the distinctiveness of Hong Kong Bitcoin ETFs compared to their US counterparts and the benefits they offer.

Key Points of Hong Kong Bitcoin ETFs

Hong Kong’s ETFs have adopted an “in-kind” subscription and redemption system, which allows investors to exchange actual assets for fund units and conversely, while US Bitcoin funds rely on a “cash redemption” model.

As a researcher studying the cryptocurrency market, I’m excited about the upcoming launch of Hong Kong’s Bitcoin ETF, which is only three hours away. One intriguing aspect of this exchange that sets it apart is its in-kind entry and exit feature. This means investors can deposit their Bitcoins instead of selling them to buy ETF units, thereby avoiding potential capital gains tax implications. I believe this development will significantly broaden market accessibility and help bridge time zone gaps for a more seamless and continuous spot market experience.

Adam Back showed great interest in the approaching financial inflows and highlighted the distinctions between entities such as GBTC. Consequently, he envisions a unique market scenario free from the looming influence of insolvency-triggered selling in Hong Kong.

As a market analyst, I’m excited to share that Hong Kong’s #Bitcoin ETFs will open for trading in just 3 hours. With in-kind entry and exit, meaning depositing Bitcoin directly instead of cash, there’s no capital gains tax hit for investors. This provides an opportunity to access another timezone and market, making it one step closer to a 24/7 spot market experience. Let’s monitor the inflows closely and observe if this new development brings any significant differences compared to US-listed Bitcoin ETFs, such as Grayscale’s GBTC, or eliminates bankruptcy selling concerns prevalent in the Hong Kong exchange.
— Adam Back (@adam3us) April 29, 2024

In contrast, experts have projected modest additions to Bitcoin investment vehicles in Hong Kong compared to their US counterparts. As per Bloomberg Intelligence’s Rebecca Sin’s assessment, the total assets in Bitcoin and Ether funds based in Hong Kong might reach $1 billion within a timeframe of two years.

According to Han Tongli, CEO of Harvest Global, the given estimate appears too modest to him. He explains this by pointing out the widespread adoption of financial products and services in Hong Kong, which attracts investors from various parts of the world, including both the West and the East. In contrast, Tongli highlights that the US mainly caters to Western investors.

Contrarily, US spot Bitcoin ETFs witnessed outflows amounting to $51 million on Monday, April 29, according to Farside Investors’ data.

Chinese Funds Coming to Hong Kong?

As a researcher studying digital assets, I’ve frequently mentioned that the race between East and West for approval of Bitcoin Exchange-Traded Funds (ETFs) is intensifying. Hong Kong won’t introduce Bitcoin ETFs without China’s consent. China aims to challenge the institutional Bitcoin dominance in the West. The theory of game theory in full play, with each nation-state striving for complete adoption – let the competition begin!

Gurbacs found it intriguing to see which types of agreements China would enter into in the future. His hypothesis indicated that their interests might go beyond exchange-traded funds (ETFs), potentially encompassing private technology, market infrastructure, and even physical Bitcoin. The launch of the Hong Kong ETF not only legitimized these investments but also signaled that engaging within traditional frameworks was acceptable.

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2024-04-30 07:44