The first batch of six Bitcoin and Ethereum spot ETFs approved by the Hong Kong Securities and Futures Commission (SFC) has been issued today and will officially be listed on the Hong Kong Stock Exchange tomorrow. This article will inventory the differences among these six spot ETFs in terms of management fees, trading, issuance price, and virtual asset platforms.
(Historical background:
Hong Kong BTC and ETH spot ETFs approved simultaneously, becoming a new catalyst for the market?
)
(Supplementary background:
Hong Kong’s six “Bitcoin and Ethereum spot ETFs” to start trading on April 30, CSOP, Huatai, and Bosera wage a fee war.
)
On the 15th, the SFC approved the applications of Bosera International, Huatai Fund, CSOP International, and other three Chinese public fund giants’ Hong Kong subsidiaries for the issuance of six Bitcoin and Ethereum spot ETF products, becoming the first market in Asia to issue virtual asset spot ETFs. These six ETFs were issued today (29th) and will be officially listed on the Hong Kong Stock Exchange tomorrow.
What are the differences among the six spot ETFs?
Huatai (Hong Kong), Bosera International, and CSOP International have each issued two products: Bitcoin spot ETF and Ethereum spot ETF. According to China Fund News, these six ETFs have slight differences in management fees, trading, issuance price, and virtual asset platforms.
In terms of management fees:
CSOP Bitcoin and Ethereum spot ETFs have an annual management fee of 0.3% of net assets, with the first six months exempted from the date of listing.
Bosera Bitcoin and Ethereum spot ETFs have an annual management fee of 0.6% of net assets, temporarily waived from April 30th, 2024.
Huatai Bitcoin and Ethereum spot ETFs have an annual management fee of 0.99%.
In terms of issuance price:
CSOP International and Huatai (Hong Kong) products have an issuance price of $1 per share.
Bosera Bitcoin and Ethereum spot ETFs have initial issuance prices that are roughly equivalent to 1/10,000 and 1/1,000 of the tracking index on April 26, 2024, respectively. This means that the corresponding net asset value of the fund shares after conversion is approximately 0.0001 BTC and 0.001 ETH, so holding 10,000 shares is roughly equivalent to 1 BTC and holding 1,000 shares is roughly equivalent to 1 ETH.
In terms of trading units:
CSOP International’s Bitcoin/Ethereum spot ETFs have a minimum application of 100,000 shares (or multiples) in the primary market, and a minimum trading unit of 100 shares in the secondary market.
Bosera Bitcoin spot ETF has a minimum application of 50,000 shares (or multiples) in the primary market, and a minimum trading unit of 10 shares in the secondary market. Bosera Ethereum spot ETF has a minimum application of 100,000 shares (or multiples) in the primary market, and a minimum trading unit of 10 shares in the secondary market.
In addition, compared with CSOP International and Bosera International’s products, Huatai (Hong Kong) Bitcoin and Ethereum spot ETFs also include a Renminbi counter.
Regarding the virtual asset platforms, CSOP and Huatai’s products have chosen OSL as their virtual asset trading and custody partner, while Bosera’s products are supported by the cryptocurrency exchange HashKey Exchange, covering aspects such as trading and custody.
Experts point out that in addition to the differences in fees, issuance, and trading arrangements, each ETF also has different market makers and virtual asset platforms. Therefore, investors need to pay attention to the total cost of each ETF.
The management scale of Hong Kong spot ETFs is expected to reach HKD 1 billion.
Since the approval of the first global Bitcoin spot ETF in the United States in January this year, the management scale of related ETFs has approached $58.9 billion. Due to the relatively small size of the Hong Kong ETF market, Bloomberg ETF analyst Eric Balchunas previously estimated that the capital inflow of Hong Kong Bitcoin spot ETFs might only reach $500 million.
Xian Sujun, Bloomberg’s Chief Analyst for ETF Industry Research in the Asia-Pacific region, predicts that the assets under management of Hong Kong Bitcoin and Ethereum spot ETFs are expected to reach $1 billion. However, whether this goal can be achieved may depend on the speed of improvement in infrastructure and the ecosystem.
Xian Sujun explains that there is strong demand for ETFs from retail and institutional investors in Hong Kong, and both types of investors have shown interest in virtual assets. However, the innovativeness of these products means that the infrastructure for cryptocurrency ETFs still needs time to mature. Once the ETF ecosystem develops, market competition will become more intense, capital inflows may increase, pricing will become more accurate, spreads will narrow, liquidity will increase, and fees will decrease.
Related reports
After Hong Kong approves cryptocurrency ETFs, will South Korea, Japan, and Singapore follow suit? What about Taiwan?
Will Hong Kong Ethereum spot ETF be “late” compared to Bitcoin, and can Chinese investors buy it?
Hong Kong takes the lead in approving Ethereum spot ETF. Bloomberg analyst: Don’t expect large capital inflows, but it will force the SEC to accelerate approval?