Hong Kong retail investors can use securities accounts to invest in spot Bitcoin and Ethereum ETFs

The launch of Hong Kong Bitcoin and Ethereum spot ETFs is imminent.

According to previous news, in the early stage of the Bitcoin spot ETF project, detailed communication and planning had been done with the Hong Kong Stock Exchange in advance, and it is expected that the entire process can be completed in about 10 days. The China Securities Regulatory Commission originally planned that the Bitcoin spot ETF would be listed around April 25, no later than the end of April; the listing of the Ethereum spot ETF is expected to land in May.

Unlike the previous individual retail investors who needed to open an account on the virtual asset trading platform, ETF trading only requires a traditional securities account to complete, providing new individual retail investors with many conveniences in asset security, private key custody, wallet management and trading. Industry insiders generally believe that this change in investment method will create a bridge for connecting the traditional and virtual asset markets, and will inject more fresh blood into the virtual asset market.

Individual investors in Hong Kong can use securities accounts to invest in spot Bitcoin and Ethereum ETFs

According to Hong Kong's TVB News, at this stage, investors who want to purchase virtual assets need to open an account at a virtual asset exchange; but with China Asset Management, Bosera Asset Management, and Harvest Asset Management announcing that they have obtained license approval from the Securities and Futures Commission and have cooperated with two licensed exchanges on the market to launch Bitcoin and Ethereum spot ETFs, individual investors who have obtained legal status in Hong Kong or other eligible overseas legal status can now use securities accounts directly in Hong Kong to invest in spot Bitcoin and Ethereum without opening an account at an exchange. OSL Executive Director and Head of Regulatory Affairs Diao Jiajun said: "In the past, investors were worried about security or were unfamiliar with platforms they had never touched before. Now, investing through the most familiar channels and securities accounts that they used to use must be attractive. For investors, there is an extra layer of confidence to a certain extent. There are well-known fund managers managing products to ensure the security of the products and to ensure that they are linked to the index." Blockchain technology consultant Li Sicong said: "The Bitcoin spot exchange-traded fund (ETF) was launched in the United States in the past few months. As soon as they launched the spot trading fund, the entire Bitcoin market was very "vigorous". There is no Ethereum spot trading in the United States, and Hong Kong is ahead of the United States recently. Some of them cannot be bought in the United States. Can they be bought in Hong Kong through this legal channel? There may be an opportunity." Hong Kong Election Committee Sector Member Wu Jiezhuang said: "Some companies and families want to participate, open a wallet, but don't know how to open an account. It is very complicated for them, but they can participate in the existing market. Recently, there is Web3 Carnival brings a large number of tourists to Hong Kong, and they are high-spending. That week, hotel rooms and high-end restaurants are also booked well, which can cause some new shocks. ”

Physical subscription and redemption are expected to increase
liquidity and arbitrage opportunities

Hong Kong spot Bitcoin and Ethereum spot ETFs not only give individual retail investors the opportunity to invest in virtual assets. More importantly, compared with the US market that only supports cash subscription and redemption of ETFs, physical subscription and redemption will provide Hong Kong individual investors with more diverse and appropriate investment options.

On the one hand, physical subscription and redemption of ETFs will open up the compliant "withdrawal" channel for Bitcoin and Ethereum.Especially for institutions and high-net-worth investors, converting Bitcoin into an ETF with a nearly fixed ratio can effectively avoid the potential problem of frozen cards when "withdrawing" through exchanges; at the same time, it can also reduce the security risks in wallet and private key management, and further protect the security of their own assets.

On the other hand, potential arbitrage opportunities are also a focus of attention. There are many brokerages in the secondary market, a large number of users, and obvious differences in the size of funds. After using the physical subscription method to obtain ETF shares in the primary market, as long as there is a premium in the secondary market, you can sell them for profit; even if the secondary market performs poorly, the "coin in and coin out" method can also retain virtual asset spot chips, and investors can effectively control the risk of losses.

Victory Securities is the first participating brokerage in Hong Kong that can subscribe for Bitcoin and Ethereum in the primary market. Currently, Victory Securities has been approved for Hong Kong virtual asset license No. 1 (virtual asset trading), license No. 4 (virtual asset consulting services) and license No. 9 (virtual asset management services), and is also the first brokerage in Hong Kong that can conduct virtual asset business for retail investors. Before the listing of this virtual asset spot ETF, Victory Securities seized the time window to launch the VictoryX Victory Pass App, which integrates virtual assets, Hong Kong stocks and US stocks. The further optimization of the account opening and subscription process will bring rare market opportunities to Victory Securities.

It must be noted that users from mainland China cannot open an account directly at Victory Securities. When submitting an account opening application, in addition to the mainland ID card, a legal proof of overseas stay, address and overseas residence and work is required, such as the Hong Kong Talent ID card, work visa, EP, Thai LinkedIn visa, etc.

Can Hong Kong surpass the United States?

The transaction cost of Bitcoin spot ETF in Hong Kong may be slightly higher than that in the US market: on the one hand, SFC requires that the virtual assets under custody be insured; on the other hand, SFC requires institutions to cooperate with ETF index providers. Although it is beneficial to protect the safety of investors' assets, the overall high cost makes the transaction fees of Hong Kong Bitcoin spot ETF not advantageous.

On the other hand, the listing and physical subscription of Ethereum spot ETF has brought new opportunities to Hong Kong. In addition, Hong Kong's regulatory framework is clearer, and the supervision of virtual assets is clearer and more powerful, which is also beneficial to the industry to continue to innovate.

Even if the capital volume of the Hong Kong market is far less than that of the United States, the listing of virtual asset spot ETFs will still help Hong Kong attract funds and determine its leading position in Asia. The world pattern of the symbol of the East and the West has also been formed.

Can Hong Kong, with the launch of ETFs, be on par with the United States in the status of the world's virtual asset center? Wait until 2 months after the listing, and we will see the result.