Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
Analysts suggest that Bitcoin ETFs may experience considerable expansion in Hong Kong owing to the in-kind creation framework.
Experts anticipate that Bitcoin exchange-traded funds (ETFs) may experience considerable growth following their introduction in Hong Kong, attributed to the implementation of in-kind creation models.
Bloomberg’s senior ETF analyst Eric Balchunas emphasized that Hong Kong’s adoption of an in-kind creation model for spot Bitcoin ETFs could enhance the assets under management (AUM) and the trading volume for ETF products in this rapidly developing area.
Balchunas’s viewpoint was supported by a research note from Bloomberg ETF analyst Rebecca Sin, who indicated that the in-kind model would offer an “opportunity for the market.”
As per Sin:
“Hong Kong is pursuing in-kind creation of the ETF, in contrast to the US, where transactions are cash-only — in the US, it’s cash in, Bitcoin ETF out, while Hong Kong aims for Bitcoin in, ETF out. This could be an opportunity for the market.”
Earlier this year, Hong Kong regulators expressed their willingness to accept applications for spot crypto ETFs, with intentions to launch these financial products by mid-year. Since then, several entities, including Harvest Hong Kong, have submitted applications to establish a spot Bitcoin ETF.
Related Posts
In-kind vs. Cash creations
The potential adoption of the in-kind model in Hong Kong sharply contrasts with the cash-creation model preferred by US regulators for its spot Bitcoin ETFs.
With in-kind redemptions, ETF issuers can swap the fund’s underlying assets, such as Bitcoin, with market makers instead of engaging in cash transactions during share creation and redemption. This process allows the ETF to issue creation units without the need to sell the securities for cash immediately.
Conversely, the cash redemptions preferred by the US SEC necessitate that fund managers sell Bitcoin to provide cash to redeeming shareholders.
Importantly, BlackRock, one of the Bitcoin ETF issuers, had cautioned that this approach presents the challenge of keeping share prices aligned with Bitcoin’s true value.
The post Bitcoin ETFs could see significant growth in Hong Kong due to in-kind creation model – analysts appeared first on CryptoSlate.
