Rebecca Sin of Bloomberg, an ETF analyst, has brought attention to the possible hurdles and opportunities for newly authorized Bitcoin and Ether ETFs in Hong Kong. As reported by Sin, mainland Chinese investors may encounter substantial obstacles when trying to invest in these funds due to current regulations limiting virtual asset investments.
Although individual investors have the option to utilize the $50,000 limit for remittances, this route is seldom explored for such investments. Similarly, it seems challenging for institutional investors to take advantage of the Qualified Domestic Institutional Investor (QDII) quota, given that approvals for virtual asset ETFs under this program are unlikely to materialize soon.
When it comes to the new ETFs, the cost of managing them is another important factor to consider. The expected management fees for these funds are around 1-2%. This fee level is similar to what’s charged for other ETFs available in the market, like CSOP’s Bitcoin Futures ETF (3066 HK) and Ether Futures ETF (3068 HK), which both carry a management fee of 2%, in addition to about 2% in extra fees.
The estimation by Sin suggests that Bitcoin and Ether ETFs in the new market could potentially accumulate around $1 billion in assets. However, reaching this significant level relies on the rate of advancements in infrastructure and the broader ecosystem related to these funds. It’s important to note that the combined assets under management for Bitcoin ETFs in the Asia-Pacific region (consisting of three funds in Hong Kong and two in Australia) currently stand at $250 million.
The introduction of these ETFs marks a significant development for the issuers involved—Bosera Asset Management, Harvest International, and ChinaAMC. Notably, these firms will be the pioneers in launching spot Bitcoin and Ether products in the region. Bosera, for instance, currently manages six ETFs with $40 million in assets under management, while ChinaAMC boasts 15 ETFs with a substantial $3.6 billion, and Harvest manages three ETFs totaling $10 million. These figures are set against the backdrop of Hong Kong’s entire ETF market, which holds approximately $51 billion in assets under management.
In relation to Hong Kong, we have updated our asset assessment to $1 billion within the first two years. While this is a positive development in my opinion, it falls significantly short of the $25 billion suggested by others. However, the extent of infrastructure enhancements will greatly influence this figure. Furthermore, we believe that Hong Kong’s role as an ETF leader in the Asian region, as mentioned by @RebeccaSin_SK, adds to its potential growth.
— Eric Balchunas (@EricBalchunas) April 17, 2024
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2024-04-18 10:23