Hong Kong’s monetary regulator, the Hong Kong Securities and Futures Fee (SFC), is getting ready to permit in-kind creation and redemptions for spot Bitcoin ETFs within the second quarter of this yr, Bloomberg stories.
Earlier this yr, Chinese language asset supervisor Harvest International filed for a spot Bitcoin ETF in Hong Kong. One other agency, Enterprise Sensible Monetary Holdings, additionally introduced its intention to submit an utility after the SFC expressed readiness to think about such merchandise in December.
Whereas no spot ETFs have been authorized but, Bloomberg Intelligence ETF analyst Rebecca Sin suggests it is in all probability only a matter of time. Sin additionally notes that the SFC will enable in-kind refunds, which is a distinct strategy than cash-only refunds for spot-based merchandise within the US.
“It seems like Hong Kong will enable in-kind creation and buybacks for spot BTC ETFs within the second quarter (not like the US, which is cash-only creation), which can enhance the quantity and belongings underneath administration within the fast-growing area,” stated Bloomberg ETF professional Eric Balchunas. “It might assist set off it,” he commented.
In-kind redemptions are extra generally utilized by ETFs as a result of the underlying asset doesn’t must be bought. This methodology is most well-liked by traders and issuers on account of its value, tax and liquidity benefits. In distinction, money redemptions imply ETF shares can solely be exchanged for money, resulting in larger taxes and buying and selling prices.
*This isn’t funding recommendation.
