Hong Kong Bitcoin and Ether ETFs are about to be launched, opening a new chapter in digital asset investment.

Recently, the digital asset sector has made significant progress. Following the approval of the Bitcoin Spot ETF by the United States on January 10 this year, Hong Kong also announced the issuance of Bitcoin and Ether ETF products on April 29, which will be listed on the Hong Kong Stock Exchange the next day. This marks Hong Kong as the next region after the United States to approve such products, providing ordinary investors with the opportunity to participate in digital asset investment through ETFs.

A certain fund company's Hong Kong subsidiary has added digital asset management services based on its existing business, becoming the first institution among China's leading fund companies' Hong Kong subsidiaries to receive such approval. Through an exclusive interview with the company's digital asset management director, we can gain deeper insights into the latest developments in the digital asset sector in Hong Kong.

Since the Hong Kong government announced relevant policy declarations in October 2022, Hong Kong has been actively promoting itself as a global Web3.0 hub. In March of this year, the Hong Kong Monetary Authority launched three innovative sandbox projects, involving wholesale central bank digital currency, stablecoins, and the second phase of the digital Hong Kong dollar pilot program. The upcoming Bitcoin and Ether Spot ETFs further demonstrate the Hong Kong government's support for the compliant development of the crypto asset ecosystem. Industry insiders believe that as Web3.0 technology gains more recognition in the field of financial innovation, the importance of digital assets in the market is increasingly prominent, and Hong Kong's digital asset industry has enormous growth potential.

Compared to the United States, Hong Kong regulators have taken a different approach to ETF product design. Hong Kong allows both cash and physical subscriptions, and participating traders can directly use Bitcoin or Ether to subscribe or redeem ETF shares, while the U.S. only allows cash transactions. Although the current market size of the U.S. Spot Bitcoin ETF is larger, Hong Kong, as one of the first regions to approve Spot Ether ETFs and allow retail participation, has a unique advantage.

The Hong Kong Securities and Futures Commission has established a strict regulatory framework for cryptocurrency asset funds, requiring fund management companies to have a good regulatory record, to only invest in cryptocurrency assets listed on licensed trading platforms, and to prohibit leverage exposure at the fund level. In terms of custody, custodians are required to delegate the custody function of cryptocurrencies to licensed institutions or institutions that meet the standards set by the Monetary Authority.

The regulatory and licensing framework implemented in Hong Kong emphasizes strict compliance with anti-money laundering, know your customer, and know your token standards. These regulations impose strict obligations on market participants to prevent illegal financial activities. In contrast, the regulation of cryptocurrency trading platforms and custodians in the United States is not yet comprehensive.

Currently, qualified investors, institutional investors, retail investors, and compliant international investors in Hong Kong can invest in cryptocurrency ETFs. Investors from mainland China are currently not allowed to invest in cryptocurrency ETFs in Hong Kong. Specific investment qualifications can be consulted with brokers and sales channels, and attention should be paid to potential regulatory adjustments that may be introduced in the future.

For digital asset investment, industry insiders have proposed the "3D Theory", which stands for Defensive (risk defense), Diversification (portfolio diversification), and Decision (investment decision-making). Taking Bitcoin as an example, it performs well during hedging periods and has a lower correlation with traditional assets, allowing for effective diversification of the portfolio. However, due to its speculative nature and short-term volatility, investment decision-making becomes complex and variable.

In the long term, Bitcoin investments outperform other major asset classes. Data shows that over the past 7 years, Bitcoin's annualized return rate is close to 60%, far exceeding the average return rate of 7% for other major assets. However, investors should also be aware of various risks associated with digital asset investments, such as concentration risk, industry risk, and speculative risk.

A certain fund company, as the largest ETF issuer in China, has been deeply engaged in the Hong Kong market for 16 years, managing multiple global or Hong Kong's largest ETF products. With rich experience and a strong team, the company is confident in achieving success in the Hong Kong digital asset ETF market. Observing the U.S. market, a large asset management company's Bitcoin Spot ETF saw its scale grow by about 1,700 times in just three months, demonstrating traditional investors' enormous interest in digital assets and highlighting Hong Kong's competitive advantage in the global digital asset field.