Optionality in terms of in-kind redemption and subscription for crypto exchange-traded funds could act as a competitive edge for Hong Kong, according to KPMG.
Hong Kong is gradually ushering in the first batch of spot crypto exchange-traded funds (ETF). Those that have announced intentions to launch their own Bitcoin and Ether ETFs include Bosera, China AMC as well as Harvest, which said trading could begin as early as the end of April.
According to Robert Zhan, director of risk consulting at KPMG China, the approvals are a key milestone in Hong Kong’s crypto hub ambitions and showcase the city’s «drive to not only catch up to other markets in the world but also lead the world in term of virtual assets innovation and regulation going forward».
In-Kind Redemption and Subscription
Zhan notes that Hong Kong-issued spot crypto ETFs have «many advantages» over those issued in other jurisdictions including higher emphasis placed on investor protection and additional options in redemption methods.
«The in-kind redemption and subscription could be attractive for investors that appreciate such optionality, for example, existing institutional BTC and ETH owners that custody their own virtual assets may consider the benefit of holding through the ETFs without the cost of first converting to fiat,» he said.
