Demex Daily #133: Hong Kong Launches First In-Kind Bitcoin and Ether ETFs

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Hong Kong has approved its first spot exchange-traded funds (ETFs) for Bitcoin and Ether, with the local Securities and Futures Commission (SFC) granting conditional approval to at least three issuers on April 15. The approved ETFs, set to be launched by Chinese asset managers including the Hong Kong units of Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC), will utilize an in-kind creation model. This model allows for the issuance of new ETF shares using Bitcoin and Ether, contrasting with the cash-create model used in the United States. The in-kind model is expected to enhance market liquidity and stability by facilitating direct exchanges of assets for ETF shares and reducing reliance on cash settlements. While the exact trading start date for these ETFs in Hong Kong is still unconfirmed, the initiative is anticipated to significantly increase capital inflow into Hong Kong's digital asset market.

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Tether's CEO, Paolo Ardoino, recently previewed a new tokenization platform, describing it as a fully non-custodial, multi-chain, and highly customizable system that can handle various asset types, including bonds, stocks, and rewards programs. Although specific details remain scarce, Ardoino highlighted the platform's capability to support the tokenization of Real World Assets (RWAs) while allowing users complete control over their assets. This initiative indicates Tether's ambition to expand beyond its dominant position in the stablecoin market, where its USDT coin leads with a 77% share of the $157 billion market. The platform aims to integrate various blockchain ecosystems and provide a white-label solution leveraging Tether’s technology.