Bitcoin ETF: Strategic Opportunities and Challenges in Hong Kong

The launch of the Bitcoin ETF has sparked heated discussions in the market, with bullish narratives driving BTC to break past previous highs, but long-term investors taking profits has also led to price corrections. This phenomenon of rising and falling prices is consistent with the logic of traditional commodity markets.

In the discussion of Bitcoin/Ethereum spot ETFs, the following issues are worth noting:

1. Regulatory and Product Characteristics of Bitcoin/Ethereum ETFs in Hong Kong
2. Global Bitcoin/Ethereum ETF Trading Volume and Its Impact
3. The Game Between Traditional Finance and the Virtual Asset Market, Sources of Funds, and Institutional Layout

Regulatory Environment: Quick Decision-Making vs. Cautious Approval

Different jurisdictions have varying attitudes towards virtual asset ETFs, reflecting differences in regulatory systems. Europe ( and Canada ) rely on centralized decision-making, while the United States has experienced a long-standing tug-of-war between the market and regulatory bodies.

Regulatory Framework Comparison:

| Country | Approval Time | Regulatory Agency | Reason | Approval Speed | |------|----------|----------|------|----------| | USA | January 2024 | CFTC, SEC | Commodity and securities disputes, regulatory jurisdiction issues | Slow | | Hong Kong | April 2024 | SFC | Centralized Regulatory Power | Fast | | Canada | February 2021 | CSA | Regulatory system aligned upwards | 中 |

Product Features: Unique Advantages of Hong Kong ETF

The Hong Kong virtual asset spot ETF has the following characteristics:

1. Support multi-currency trading ( HKD, USD, CNY )
2. Provide options for physical cryptocurrency and cash redemption.
3. There are unlisted shares
4. Trading platforms and custodians are regulated by the Hong Kong Securities and Futures Commission.
5. Provide insurance coverage
6. No derivative instrument risk and rolling costs
7. Open to professional and retail investors in Hong Kong

These characteristics provide unique advantages for the Hong Kong ETF, helping to attract a diverse group of investors.

Trading Scale: The Potential of Hong Kong ETF

The Hong Kong Bitcoin ETF is expected to reach a scale of 10 billion USD by the end of the year. Although there is still a gap compared to the United States, it holds an important position in the Asian market.

Comparison of ETF Scale ( Unit: 100 million USD ):

• Total size of US ETF: 71900
• Total scale of Hong Kong ETF: 521
• Total size of Canadian ETF: 301

Maximum assets under management BTC ETF:

• Grayscale Bitcoin Trust: 264
• Hong Kong ( expects ): 100
• Canada PURPOSE BITCOIN ETF: 13

Unique Advantages of Hong Kong ETF

1. Spot arbitrage opportunities:

   • Promote liquidity and market depth
   • Bring pricing power and new business opportunities to the exchange
   • Promote the development of new trading tools and services

2. Tax advantages:

   • Hong Kong has no capital gains tax
   • Avoid 30% withholding tax on dividends in the United States

Impact on the Hong Kong Financial Market

1. May reduce liquidity in the Hong Kong stock market

2. Funds are shifting from the traditional stock market to virtual asset ETFs.

3. The entry of state-owned assets brings new opportunities:

   • Enhance investor confidence
   • Improve the financing environment
   • Expand customer base

4. Transformation of Traditional Financial Institutions:

   • Extend to the upstream and downstream of the industry chain
   • Launch innovative products
   • Strengthen cross-industry cooperation

Conclusion

The launch of the Hong Kong virtual asset spot ETF is an important milestone, providing a compliant entry channel for "old money" and enhancing the image and legitimacy of virtual assets. This initiative increases market liquidity, promotes industry innovation, and helps Hong Kong establish its position as a world-class Web3 financial center.

However, investors should be aware that the virtual asset market still carries significant risks and has substantial fluctuations in returns. Investment decisions should be based on individual risk tolerance and made with careful evaluation.