The development of the crypto industry around the world continues to move forward, and Hong Kong is now in the spotlight with groundbreaking steps taken by their regulator. The Hong Kong Financial Services Authority (SFC) has given the green light to the launch of Bitcoin and Ethereum-based exchange-traded funds (ETFs) on the spot market – making Hong Kong the first territory to do this.
Historic Approval by Hong Kong Regulators
Hong Kong has made history in the crypto industry by becoming the first territory to pass conditional approval for the issuance of Bitcoin and Ethereum-based exchange-traded funds (ETFs) on the spot market.
This is a big step for Hong Kong, considering that the country, China, banned all crypto transactions in September 2021. This approval generated enthusiasm among investors, especially due to the massive inflow of Chinese investors into overseas equities due to the buoyant domestic stock market. stagnant.
Enthusiasm Among Investors
“This is a very important development for the crypto industry in Hong Kong,” said senior ETF analyst at Bloomberg, Eric Balchunas. “Hong Kong is now a pioneer in offering spot-based crypto ETFs, something that does not yet exist in the US market.”
Nonetheless, experts warn that the inflow of Chinese investors seeking exposure to banned cryptocurrencies may not be as large as expected. Balchunas estimates the majority of inflows will come from domestic Hong Kong retail investors.
The World’s First Ethereum ETF
Additionally, the approved spot-based Ethereum ETF is the first of its kind in the world. This could be a valuable case study of the performance of these products and offer a unique advantage for Hong Kong if not replicated elsewhere.
The in-kind subscription and redemption mechanism (a mechanism where investors can exchange crypto assets such as Bitcoin or Ethereum for ETF units, and vice versa) in this ETF is also considered more cost-effective than the cash redemption model used in the US. This can be a special attraction for investors.
So what is Indonesia’s potential?
Overall, the approval of Hong Kong’s first spot crypto ETF is an important development in the digital asset industry, which could make Hong Kong a hub for crypto innovation in Asia. Meanwhile, Indonesia, as a country with a large population and increasing crypto adoption, also has great potential to follow in Hong Kong’s footsteps in passing a crypto ETF in the future.
Indonesia, which has shown growing interest in digital assets, could see Hong Kong’s developments as an opportunity. Indonesian financial regulators, such as the Financial Services Authority (OJK), could study the steps taken by Hong Kong to open the door to strictly regulated crypto products. This could pave the way for the launch of a similar crypto ETF in the Indonesian market, which could attract the interest of domestic retail and institutional investors.
With a broad and growing crypto user base, Indonesia has a strong foundation for developing a more advanced crypto ecosystem. The launch of a crypto ETF could be a catalyst for wider crypto adoption among Indonesian investors, while increasing visibility and trust in digital assets in the country.
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*Disclaimer
This content aims to enrich reader information. Always do your own research and consider carefully before investing. Use funds that are not too vital for your needs before getting involved in investing. All bitcoin buying and selling activities and other crypto asset investments are the responsibility of the reader.
Author: RB & AL
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