In addition to the higher starting capital, Zhu Haokang also noted the availability of subscriptions and in-kind redemptions, as well as regulatory clarity in Hong Kong, which allowed the creation of a spot Ethereum ETF before ONE became available in the US. Also took part in the briefing. was Wayne Huang, head of ETFs and custodian Crypto OSL.
Source: Foresight News
What does China Asset Management (Hong Kong) think about the scale of capital inflows on the first day of tomorrow's listing of the Hong Kong Cryptocurrency ETF?
Zhu Haokang : I am very confident that the initial listing scale of the Hong Kong virtual asset spot ETF (more than US$125 million) can exceed the issuance scale on the first day of the United States. The issuance volume of 10 US issuers of spot Bitcoin ETFs on the first day of January 10 this year amounted to $125 million. Huaxia is confident of becoming the largest ETF issuer among the three issuers. Details will be revealed to everyone tomorrow morning at 9:30.
Wayne Huang : Tomorrow morning at 9:30 there will be an announcement from the Hong Kong Stock Exchange, but OSL did complete its first day of fundraising on OSL today with two funds (including Huaxia and another fund that partners with us). Judging by the numbers, the transactions do far exceed capital inflows into the US Bitcoin spot ETF on the first day of trading.
What is the difference between the China Bitcoin Spot ETF and the China Ethereum Spot 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 redemptions, which the US Spot Bitcoin ETF does not have.
Additionally, there are two differences between ChinaAMC's products and the other two: ChinaAMC Hong Kong Spot ETF is the only ETF with Hong Kong Dollar, US Dollar and RMB counters. Secondly, in addition to listed shares, we have unquoted shares. These two items are not available from the other two companies.
Besides Hong Kong, where else have investors participated in the Hong Kong Virtual Asset Spot ETF?
Zhu Haokang : With the physical subscription method, investors primarily include Bitcoin miners and ETC. They can use their Bitcoin assets to directly purchase virtual asset spot ETFs in Hong Kong. Secondly, in countries and regions that have not yet issued ETFs outside of Hong Kong, such as Singapore and the Middle East, we have also come into contact with a large number of highly interested investors. Additionally, although the current US Bitcoin ETF market is very large compared to the United States, Hong Kong uses cash and physical subscriptions and is open for trading during Asian trading hours, which will still attract many US investors. Finally, several family offices in Asia and abroad are also very interested in spot crypto ETFs.
Is there currently only ONE securities firm, Victory Securities, authorized to conduct related physical subscription transactions?
Wayne Huang : Not only Victory Securities can do physical subscription, but also Huaying Securities supported by OSL. There are currently three securities companies that can carry out physical subscriptions, and more measures will come later. So with the ETF listing tomorrow, many social media brokers are following suit, and it's possible that even more brokers will get involved in the entire virtual asset ETF ecosystem in May.
What are the specific physical purchase transactions?
Wayne Huang : Physical subscription is an innovative initiative for Hong Kong ETFs, which is different from US ETFs. First, the brokerage firm needs to renew its license #1 to be able to process virtual asset transactions. Investors can transfer their coins to OSL through this brokerage firm and then finally transfer their assets back to OSL. Transfer it to the fund's escrow account and complete the entire physical subscription process.
What is OSL's anti-money laundering process for physical subscriptions? Is it acceptable for the counterparty to be the wallet of another exchange?
Wayne Huang : First, investors must connect to OSL through a brokerage firm to open an account. We will whitelist the wallet that the money is going to be transferred to to prove that the wallet is owned and controlled by the investor. Secondly, we will check the investment. The user's personal wallet should be checked to see if there are any suspicious transactions among the last dozen wallet transactions in the chain. Only whitelisted wallets can allow him to transfer money.
Can a wallet be a wallet from another exchange? Theoretically this can be done. If the anti-money laundering rules of the other exchange comply with the OSL rules, we can accept the transfer of coins from the other party, but we need the other exchange to provide certain customer information.
Could Hong Kong Cryptocurrency Spot ETFs Be Opened to Mainland Investors? Or will there be an opportunity to open it up to mainland investors in the future?
Zhu Haokang : Currently, investors from mainland China are not allowed to invest in Hong Kong Spot Cryptocurrency ETFs. Qualified Hong Kong investors, institutional investors, retail investors and compliant international investors can invest in Cryptocurrency Spot ETFs . You may wish to consult with brokers and sales channels for more detailed information and continue to pay attention to whether there will be relevant regulatory changes or the introduction of a specific regulatory framework in the future.
The Hong Kong Ethereum ETF is the first in the world, but if the United States finally decides that “Ethereum” is a security, will that affect the Ethereum Spot ETF?
Wayne Huang : Probably not, because the US definition of Ethereum as a security will not affect the independent decision-making of the Hong Kong Securities Regulatory Commission. The Hong Kong Securities Regulatory Commission has its own set of procedures for determining whether a particular virtual asset is a security and can be opened to retail traders. It will not be affected by differences of opinion between various US agencies or, ultimately, by their own unilateral determination. to Hong Kong.
I also want to highlight why Hong Kong could be the first in the world to launch a spot ETF on Ethereum and not the US? Several departments are simultaneously speaking out or trying to regulate Cryptocurrency in the United States. Who should oversee cryptocurrencies in Hong Kong has long been decided, namely the China Securities Regulatory Commission. The China Securities Regulatory Commission has developed a very clear regulatory framework. Hong Kong already had a clear definition of Ethereum. Ethereum. It is not a security, but the first non-security virtual asset to be included in Hong Kong supervision along with Bitcoin, and is ONE of the two purposes that can be provided to retail investors.
Will Hong Kong launch more virtual asset ETFs?
Wayne Huang : So far only Bitcoin and Ethereum . We have repeatedly discussed with the China Securities Regulatory Commission the process of listing coins in compliance-related transactions in Hong Kong. I'll share briefly. First, we need the issuer of the virtual asset or ourselves to find a legal Opinion on whether the coin is a security or a non-security. And turn the legal Opinion and our currency due diligence into a detailed research report and submit it to the China Securities Regulatory Commission. After final approval from the China Securities Regulatory Commission, it will be open to professional investors for the first time. When a certain level of liquidity is reached, it will be turned on. After a certain period of time within the index, we may apply to the Securities Regulatory Commission to update the currency in which retail investors will trade.
But at the moment, after 4 years of operation, OSL still only has two assets, Bitcoin and Ethereum, open for trading by retail investors. That is, at the moment, only these two coins meet the conditions for launching an ETF. , but we have discussed and studied this matter with the China Securities Regulatory Commission.
Will you consider launching ETFs such as virtual asset reverse leverage?
Zhu Haokang : The ETF itself is full of financial attributes, which includes innovation in many financial products. We have also seen some international investment banks introduce some financial innovations and develop similar derivatives based on existing US products. We also pay close attention and communicate with a large number of investment banks and securities companies. To give a simple example: The Hong Kong Stock Exchange also allows ETFs to conduct short selling and even margin trading.. We are also communicating with our partners to provide greater returns and more innovation in financial products for our ETF investors. .
How do you think the next Cryptocurrency ETF will affect the price of Cryptocurrency?
Zhu Haokang : Based on the analysis of various factors, we believe that Cryptocurrency ETFs will be beneficial to Cryptocurrency prices . Firstly, the Hong Kong Crypto Spot ETF Market brings more liquidity to the Crypto market . Second, accelerate industry compliance. Thirdly, financing channels have been expanded. Fourth, investors can gain arbitrage opportunities between ETF prices and spot prices, allowing more market makers and arbitrage investors to actively participate. Fifth, with the advent of our Crypto Spot ETF, trading factors in traditional Markets will also directly affect the Cryptocurrency market . Sixth, we believe that Hong Kong's regulatory framework is relatively clear, and the issuance of Bitcoin and Ethereum ETF products provides great convenience. Seventh, we believe that Hong Kong, as an international financial center, will attract more Chinese investors to trade during Asian periods, improve market liquidity and perform better than similar products in Europe or Canada.
Huaxia's rates are higher than those of two other Hong Kong companies. Are you worried about the lack of competitiveness?
Zhu Haokang : I think everyone is more concerned about the issue of fees. First of all, China Asset Management Hong Kong's fee structure fully complies with the standards of thematic and complex ETFs listed in Hong Kong. You can refer to previously listed Cryptocurrency, Futures ETFs and various thematic ETFs. Fees. Our rates are lower than similar rates. Secondly, our products provide very high flexibility in trading capabilities, not only supporting listed and unlisted stocks, but also supporting three types of OTC transactions in US dollars, Hong Kong dollars and RMB. This is our unique advantage. Third, the complexity and innovation of our products make risk management and operational stability important.