Solomon JFZ, one of Asia’s leading stock brokerage firms, has partnered with OSL Digital Securities to facilitate in-kind subscription and redemption in Bitcoin and Ethereum ETFs that will be listed in Hong Kong from tomorrow.
Thomas Tam, Chairman of Solomon JFZ, said the company will play a crucial role in launching the first Bitcoin and Ethereum spot investment funds in Hong Kong, will be launched on Tuesday, April 30, Bloomberg reported.
Hong Kong's Securities Futures Commission (SFC) has approved the listing of Bitcoin and Ethereum spot ETFs three months after the US SEC gave the green light to these cryptocurrency-based financial investment vehicles.
According to Tam, the move marks a significant regulatory step forward for Hong Kong's plans to become a global digital asset hub.
Hong Kong approves in-kind redemptions on Bitcoin and Ethereum ETFs
Together with OSL Digital Securities, a digital asset service provider, Solomon JFZ will be responsible for ensuring strict regulatory compliance with Hong Kong regulators on the cryptocurrency spot ETFs, as well as facilitating in-kind transactions in the fund, in order to allow investors to subscribe or redeem their fund shares directly with the underlying digital assets, whether bitcoins or ethersSolomon JFZ will act as a participating dealer to facilitate in-kind transactions of the Bitcoin and Ethereum spot ETF.
In this regard, Tam stressed that the introduction of the subscription and redemption in kind model for the Bitcoin and Ethereum spot ETFs approved in Hong Kong is considered a transformative step to “channel significant investments in the virtual assets space.”
In ETFs, the in-kind redemption model allows investors to buy into the ETF using the underlying asset, which in this case would be Bitcoin or Ethereum, directly. Also, under this model, investors have the option to sell their shares in the fund to be reimbursed in cryptocurrencies, as appropriate.
While the United States has refused to accept this repayment model, Hong Kong has given its approval, demonstrating its progress in financial innovation and the dynamism of the economy in the region.
A new chapter for cryptocurrencies
The regulatory changes that Hong Kong has been implementing in relation to the cryptocurrency industry allow it to explore the potential and innovation of this sector while advancing its aspirations to be a global center of virtual asset innovation.
OSL Digital Securities Chairman and CEO Patrick Pan highlighted that the approval of spot ETFs for the world’s top two cryptocurrencies represents a significant enrichment of Hong Kong’s financial landscape, enhancing investment options and liquidity in the market. While investors in China may not have access to spot ETFs that will be listed on the Hong Kong Stock Exchange starting tomorrow in the near future, experts point to the notable strides the crypto industry is making in Asia, with the Hong Kong Special Administrative Region, which is one of the leading ETF markets in the region, fostering cryptocurrency innovation.
This bold move could attract several billion dollars in investment into the cryptocurrency market. Moreover, it should be noted that the US SEC is likely to reject Ethereum spot ETFs next month, so Hong Kong could offer an attractive investment avenue for investors in the region interested in ether.
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