Virtual Asset ETF: New Opportunities and Challenges in the Hong Kong Financial Market

The Bitcoin ETF seeks to balance market expectations and skepticism. The bullish narrative has driven BTC to break previous highs, while long-term investors taking profits have led to price adjustments, which aligns with the operational logic of commodity markets.

Discussing Bitcoin/Ethereum spot ETFs from the perspective of product structure, key future issues include:

1. Regulatory and Product Situation of Bitcoin/Ethereum ETFs in Hong Kong
2. The global trading volume of Bitcoin/Ethereum ETFs has become the only opportunity for spot delivery worldwide.
3. The interaction between traditional finance and the virtual asset market, sources of funds and potential, and the layout of institutions.

Quick Approval: Advantages of Regulatory Framework

Different jurisdictions have varying attitudes towards virtual asset ETFs, reflecting differences in regulatory systems. Europe (including Canada) relies on centralized decision-making, while the approval process for ETFs in the United States involves a multi-party game between the market and regulatory authorities.

Hong Kong, with its unified regulatory system, can expedite the approval of virtual asset ETFs more quickly. In contrast, the approval process in the United States is relatively slow due to disagreements among regulatory agencies.

Trading Benchmark: Pooling Global Funds

1. Quantitative Expectation: The scale of the Bitcoin ETF in Hong Kong may reach 10 billion USD by the end of the year.

2. Qualitative Analysis: Hong Kong Bitcoin/Ethereum ETF has unique advantages

   • Increased liquidity and market depth from spot arbitrage opportunities
   • Exemption from withholding tax on dividends

The introduction of the spot delivery mechanism is of great significance to the industry:

• Virtual asset exchanges gain BTC pricing power, expanding price discovery methods.
• Promote the shift of Bitcoin pricing from spot to futures
• Promote exchanges to develop new trading tools and services

Traditional brokers will also benefit:

• Support for physical delivery distributor status
• The synergy between cryptocurrency prices and stock prices
• "Bull Market Subsidy" Effect

The advantage of no capital gains tax in Hong Kong further enhances the attractiveness of ETFs.

The Impact of BTC ETF on the Market

1. May accelerate the decline of Hong Kong stocks:

   • Reduce liquidity in the Hong Kong stock market
   • The scarcity of quality assets leads to capital transfer.

2. State-owned capital's entry brings new opportunities:

   • Improve the financing environment and customer expansion
   • Provide government credit endorsement for virtual assets
   • Potential market support forces

3. Integrated Layout Strategy:

   • Traditional financial institutions need new development models
   • Brokers extend upstream and downstream along the industry chain to expand their business scope.

Conclusion

The virtual asset spot ETF marks an important milestone for the virtual asset market in Hong Kong. It provides a compliant entry channel for traditional funds, enhances the image and legitimacy of virtual assets, increases market liquidity and acceptance, and promotes innovation and development in the cryptocurrency industry. This initiative lays the foundation for Hong Kong to establish itself as a world-class Web3 financial center.