Press Briefing With ChinaAMC Executive Ahead of Tuesday Launch of Hong Kong Spot Bitcoin and Ether ETFs

Zhu Haokang also noted the availability of in-kind subscriptions and redemptions in addition to the higher seed money, as well as the regulatory clarity in Hong Kong that allowed a spot ether ETF before one was available in the United States. The head of ETF and custody at crypto exchange OSL was Wayne Huang.

Source: Foresight News

What does China Asset Management (Hong Kong) think about the scale of capital inflows on the first day of listing of Hong Kong cryptocurrency ETFs tomorrow?

Zhu Haokang: I am quite confident that the initial listing scale of Hong Kong’s virtual asset spot ETF (more than US$125 million) can exceed the issuance scale of the United States on the first day. On the first day of January 10 this year, the issuance size of 10 Bitcoin spot ETF issuers in the US was $125 million. Huaxia is confident of becoming the largest ETF issuer among the three issuers. Details will be announced to everyone at 9.30am tomorrow morning.

Wayne Huang : There will be an announcement from the Hong Kong Stock Exchange at 9:30 tomorrow morning, but OSL actually completed the first day of fundraising today with two funds on OSL (including Huawei and another fund collaborating with us). Judging by the numbers, transactions are indeed much larger than the capital inflow on the first trading day of the US Bitcoin spot ETF.

What is the difference between Spot China Bitcoin ETF and Spot China Ethereum ETF and other ETFs?

Zhu Haokang: The first difference is that compared to the US spot Bitcoin ETF, we have spot and physical subscriptions and payments, which the US spot Bitcoin ETF does not have.

There are also two differences between ChinaAMC’s products and the other two: ChinaAMC’s Hong Kong spot ETF is the only ETF with Hong Kong dollar, US dollar and RMB counters. Secondly, in addition to our shares traded on the stock exchange, we also have shares that are not traded on the stock exchange. These two points are not available in the other two companies.

Besides Hong Kong, where else are investors participating in the Hong Kong virtual asset spot ETF?

Zhu Haokang: Thanks to the physical subscription method, investors can primarily mine Bitcoins, etc. They include. They can use their Bitcoin holdings to buy virtual asset spot ETFs directly in Hong Kong. Secondly, we have contacted a number of highly interested investors in countries and regions that have not yet issued ETFs outside of Hong Kong, such as Singapore and the Middle East. Additionally, although the current spot Bitcoin ETF market in the United States is very large compared to the United States, the fact that Hong Kong uses cash and physical subscriptions and is open for trading during Asian trading hours will still appeal to many American investors. Finally, many family offices in Asia and abroad are also very interested in spot crypto ETFs.

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Is there currently a single securities firm, Victory Securities, authorized to handle relevant transactions in physical subscriptions?

Wayne Huang : Not only Victory Securities, but also Huaying Securities, with OSL support, can carry out physical subscriptions. There are currently three securities firms that can do physical subscriptions, with more to follow later. So once the ETF is listed tomorrow, many brokers will follow, and it is possible that more brokers will join the entire virtual asset ETF ecosystem in May.

What are the special processes for physical purchases?

Wayne Huang : Physical subscription is a pioneering initiative for Hong Kong ETFs that is different from US ETFs. First of all, the brokerage firm needs to upgrade its No. 1 license in order to carry out virtual asset transactions. Investors can transfer their coins to OSL through this broker and then transfer their equity back to OSL. Transfer this to the fund’s custody account and complete the entire physical subscription process.

What is OSL’s physical subscription anti-money laundering process? Is it acceptable for the other party to have the wallet of the other exchange?

Wayne Huang : First, investors need to connect to OSL through a brokerage firm to open an account. We will perform whitelist verification on the wallet that is about to transfer funds to prove that this wallet is held and controlled by the investor. Second, we will verify the investment. The user’s private wallet must be scanned to determine whether there are any suspicious transactions in the wallet’s past tens of transactions in the chain. Only wallets that pass whitelist verification can allow it to transfer funds.

Can a wallet be the wallet of another exchange? Theoretically this can be done. If the other exchange’s anti-money laundering rules are consistent with OSL rules, we can accept the other party’s coin transfer, but we require the other exchange to provide certain customer information.

Could Hong Kong’s cryptocurrency spot ETFs be open to mainland investors? Or will there be a possibility of opening up to mainland investors in the future?

Zhu Haokang : Currently, mainland Chinese investors are not allowed to invest in Hong Kong’s cryptocurrency spot ETFs. Hong Kong’s qualified investors, institutional investors, retail investors and international investors who meet regulations can all invest in cryptocurrency spot ETFs. You can consult brokers and sales channels for details and continue to pay attention to whether there are relevant regulatory regulations or whether a specific regulatory framework is introduced in the future.

Hong Kong’s Ethereum spot ETF is a world first, but if the US eventually decides that “Ethereum” is a security, will that affect Hong Kong’s Ethereum spot ETF?

Wayne Huang: Probably not, because whether or not the US designates Ethereum as a security does not affect the independent decision-making of the Hong Kong Securities Regulatory Commission. The Hong Kong Securities Regulatory Commission has its own procedures for determining whether a particular virtual asset is a security and whether it can be opened to retail investors. It will not be influenced by differing views among various departments in the United States or, ultimately, by its own one-sided definitions. To Hong Kong.

I also want to highlight why it might be Hong Kong, rather than the US, that launches the Ethereum spot ETF in the world. There are multiple departments simultaneously talking about or trying to regulate cryptocurrency in the United States. It has long been decided who should regulate cryptocurrencies in Hong Kong: the China Securities Regulatory Commission. The China Securities Regulatory Commission has provided some very clear regulatory frameworks. Hong Kong already has a clear definition of Ethereum. Ethereum is not a security but is the first non-security virtual asset to be included in Hong Kong regulation, along with Bitcoin, and is one of two targets available to retail investors.

Will Hong Kong launch other virtual asset ETFs?

Wayne Huang: Only Bitcoin and Ethereum for now. We have repeatedly discussed the process of how to list coins in compliance proceedings in Hong Kong with the China Securities Regulatory Commission. Let me share briefly. First, we or the issuer of the virtual asset need to find a legal opinion stating whether the coin is a security or not. We will compile our legal opinion and due diligence on the currency into a detailed research report and submit it to the China Securities Regulatory Commission. It will first be opened to professional investors after final approval from the China Securities Regulatory Commission. It will be included when a certain level of liquidity is reached. After a certain period of time within the scope of the index, we can apply to the Securities Regulatory Commission to increase the currency in which retail investors will be traded.

But so far, after 4 years of operation, OSL still has only two assets open for trading to retail investors: Bitcoin and Ethereum. So for now, only these two coins meet the ETF launch conditions. , but we are discussing and working with the China Securities Regulatory Commission.

Will you consider launching ETFs such as inverse leverage of virtual assets?

Zhu Haokang: The ETF itself is full of financial features, including the innovation of many financial products. We have also seen some international investment banks making some financial innovations and developing derivatives similar to existing US products. We are also closely involved and in contact with many investment banks and securities firms. To give a simple example, the Hong Kong Stock Exchange also allows ETFs to short sell and even trade on margin. We are also engaging with our partners to create more income for our ETF investors and more innovation in financial products. .

How do you think the next cryptocurrency ETF will affect the price of the cryptocurrency?

Zhu Haokang : Based on the analysis of various factors, we believe that cryptocurrency ETFs will be beneficial to cryptocurrency prices. First, Hong Kong’s crypto spot ETF market provides greater liquidity to the crypto market. Second, accelerate the industry’s adaptation. Third, financing channels were expanded. Fourth, investors can obtain arbitrage opportunities between ETF prices and spot prices, allowing more market makers and arbitrage investors to actively participate. Fifth, with the transition of our crypto spot ETF, trading factors in traditional markets will also directly impact the cryptocurrency market. Sixth point, we believe that Hong Kong’s regulatory framework is relatively clear and provides great convenience for the issuance of Bitcoin and Ethereum ETF products. The seventh point is that we believe that Hong Kong, as an international financial center, will attract more Chinese investors to trade in Asian periods, improve market liquidity and outperform similar products in Europe or Canada.

Huaxia’s rates are higher than those of the other two Hong Kong companies. Worried about lack of competitiveness?

Zhu Haokang : I think everyone is more concerned about the wage issue. First of all, China Asset Management Hong Kong’s fee structure fully follows the standards of thematic and complex ETFs listed in Hong Kong. You can apply for past listed cryptocurrency, futures ETFs, and various thematic ETFs. Fees. Our fees are lower than similar fees. Secondly, our products not only support listed and unlisted shares, but also support three types of over-the-counter transactions in US dollars, Hong Kong dollars and RMB, providing very high flexibility in trading options. This is our unique advantage. Third, the complexity and innovation of our products determine the importance of our risk management and operational stability.