Hong Kong Bitcoin ETFs Could Lead To Potential Fee War: Bloomberg Analyst

Hong Kong Securities and Futures Commission (SFC) has approved three spot Bitcoin and Ethereum exchange-traded funds (ETFs) that will start trading on April 30.

According to a recent social media post by Bloomberg Intelligence ETF analyst James Seyffart, the issuers of the ETFs have revealed their fees, including one as low as 0.3% after a six-month waiver.

A potential fee war could break out in Hong Kong over these #Bitcoin & #Ethereum ETFs. Harvest coming in hot with a full fee waiver and the lowest fee at 0.3% after waiver. Tables are from my colleagues @RebeccaSin_SK & @thetrinianalyst! pic.twitter.com/zI1XobrTwZ

— James Seyffart (@JSeyff) April 24, 2024

Bitcoin ETF Competition Kicks Off in Hong Kong

The issuers, China Asset Management Co. (China AMC), Harvest Global Investments, and Bosera International and HashKey Capital, will all have Bank of China International-Prudential Trustee Limited (BOCI-Prudential) as their custodian.

The approved ETFs aim to deliver investment results that closely track the performance of Bitcoin and Ethereum, as measured by the CME CF Bitcoin Reference Rate and the CME CF Ether-Dollar Reference Rate, respectively.

The table shared by Seyffart showed that China AMC will have a management fee of 0.99%, Bosera and HashKey will have a fee of 0.6%, while Harvest Global offers a six-month waiver and a 0.3% fee afterwards.

“A potential fee war could break out in Hong Kong over these Bitcoin & Ethereum ETFs,” said Seyffart. “Harvest coming in hot with a full fee waiver and the lowest fee at 0.3% after waiver.”

China AMC to Offer Innovative Investment Choices

In China AMC’s approval announcement, the company indicated that their ETFs are “expected to begin trading on Hong Kong Stock Exchange (HKEX) starting April 30, 2024” as the first such financial products in the Asian market.

“The spot Bitcoin and Ether ETFs offer retail and institutional investors a safe, efficient, and convenient means to invest in virtual assets in a regulated framework,” said China AMC Head of Digital Assets and Head of Family Office Business Thomas Zhu.

“The in-kind feature also attracts coin holders by offering the ease of converting coins to fully regulated ETFs managed by professional fund managers and regulated custodians,” said Zhu.

China AMC believed that, in line with Hong Kong’s ambitions to cultivate a vibrant web3 ecosystem, it is positioned to develop innovative investment offerings and strategic differentiations that will assist clients in achieving their investment goals.