Hong Kong Crypto ETF Showdown: Comparing the "Big Three" Launch Details

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The launch of spot Bitcoin and Ethereum ETFs in Hong Kong marks a pivotal development in Asia’s financial landscape. On April 23, 2024, three major asset management firms—China Asset Management (Hong Kong), Harvest Fund Management, and Boshi Fund Management—received approval to issue spot crypto ETFs. These products represent the first of their kind in the region, offering investors a regulated, accessible, and secure way to gain exposure to digital assets without directly managing private keys or navigating complex crypto exchanges.

Designed to track the real-time prices of Bitcoin and Ethereum through direct holdings of the underlying assets, these ETFs function similarly to gold spot ETFs. They bring institutional-grade infrastructure to retail and institutional investors alike, simplifying entry into the crypto market while adhering to strict regulatory oversight from the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA).

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Key Features of Hong Kong’s Spot Crypto ETFs

These ETFs are built for transparency, liquidity, and compliance. Investors can trade them on traditional stock exchanges just like any other listed fund, significantly lowering the barrier to entry. The funds support both cash and in-kind subscriptions and redemptions, meaning investors can either buy shares using fiat currency or exchange actual crypto holdings for ETF units.

This dual mechanism enhances price stability by aligning the ETF’s market value closely with its net asset value (NAV), reducing premiums or discounts commonly seen in closed-end funds. Moreover, it allows sophisticated investors to arbitrage discrepancies, further strengthening market efficiency.

It's important to note that under the SFC-HKMA joint guidelines issued in December 2023, these products are not available to retail investors in mainland China or other jurisdictions where virtual asset offerings are restricted. However, mainland residents holding a Hong Kong ID card may participate if they meet local regulatory requirements.

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Comparative Overview: The Three Major Providers

While all three ETFs aim to provide exposure to Bitcoin and Ethereum, their operational structures reveal meaningful differences that could influence investor decisions.

Launch Date and Initial Pricing

All three funds went live on April 30, 2024, ensuring a level playing field at launch. However, their initial pricing models differ slightly:

Trading Units and Minimum Subscription Requirements

Accessibility varies across platforms:

When it comes to institutional-level subscriptions:

This difference suggests Harvest is positioning itself more toward professional investors, while Boshi aims for broader inclusivity.

Currency Options and Management Fees

Diversified currency support enhances global accessibility:

Management fees are a critical factor in long-term returns:

Harvest’s aggressive pricing strategy may attract cost-sensitive investors seeking low expense ratios over time.

Benchmark Index and Custody Structure

All three ETFs track the CME CF Bitcoin Reference Rate, a regulated benchmark index that calculates the volume-weighted average price of Bitcoin across major exchanges. This ensures accurate price alignment and reduces manipulation risks.

For custody:

Sub-custodians play a crucial role in handling digital asset storage, security protocols, and regulatory compliance in specialized markets.

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Trading Infrastructure: Exchanges, Market Makers & Authorized Participants

Liquidity depends heavily on robust market-making and distribution networks.

Trading Platforms

Both exchanges are pivotal in bridging traditional finance with crypto markets.

Market Makers

Market makers ensure tight bid-ask spreads and continuous liquidity:

Harvest’s multi-firm approach signals a strong commitment to deep liquidity from launch.

Authorized Participants (APs)

APs are essential for creating and redeeming ETF shares. Key APs include:

Audit Transparency and Investor Confidence

Independent audits ensure financial integrity:

Both are globally recognized firms with rigorous auditing standards. Their involvement strengthens investor trust by verifying fund holdings, valuations, and compliance with accounting principles.

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Frequently Asked Questions (FAQ)

Q: What is a spot crypto ETF?
A: A spot cryptocurrency ETF holds actual Bitcoin or Ethereum as underlying assets and aims to mirror their real-time market price. Unlike futures-based ETFs, it avoids expiration dates and roll costs.

Q: Can mainland Chinese investors buy these ETFs?
A: No—under current regulations, these products cannot be marketed to retail investors in mainland China. However, mainland residents with a Hong Kong ID may invest if they open eligible accounts and comply with local rules.

Q: How do I trade these ETFs?
A: Through any brokerage that supports Hong Kong stock exchange listings. You’ll need a securities account capable of trading HKEX-listed funds.

Q: Are these ETFs safe?
A: Yes—they operate under SFC regulation, use reputable custodians like BOCI-Prudential, and undergo independent audits. This significantly reduces counterparty and operational risks compared to direct crypto ownership.

Q: Which ETF offers the lowest fees?
A: Harvest Fund has the lowest long-term fee at 0.3%, following a six-month waiver. Boshi follows at 0.6%, while China Asset charges 0.99%.

Q: Why does the sub-custodian matter?
A: Sub-custodians manage digital asset storage and security protocols. Choosing regulated platforms like OSL or Hash Blockchain ensures cold storage, insurance coverage, and compliance with anti-money laundering (AML) standards.

Final Thoughts

Hong Kong’s entry into the spot crypto ETF arena positions it as a leader in Asia’s digital finance evolution. With three distinct yet equally robust offerings from China Asset Management, Harvest Fund, and Boshi Fund, investors now have multiple pathways to gain regulated exposure to Bitcoin and Ethereum.

Each fund brings unique advantages—whether it's Harvest’s low fees, Boshi’s flexible lot sizes, or China Asset’s multi-currency support. As adoption grows and liquidity deepens, these ETFs could become cornerstone assets in diversified portfolios.

For those seeking secure, compliant access to cryptocurrency markets without the complexities of self-custody, Hong Kong’s new generation of crypto ETFs offers a compelling solution.