Hong Kong is on the verge of a significant shift in the cryptocurrency market. The Securities and Futures Commission (SFC) is expected to green-light spot bitcoin Exchange-Traded Funds (ETFs) that allow for in-kind creations and redemptions as soon as the second quarter of this year. This development follows the applications from Harvest Global and Venture Smart Financial Holdings for a spot bitcoin ETF, after the SFC’s December announcement expressing openness to such financial products. Although none have been approved yet, experts believe approval is imminent.

The introduction of in-kind redemptions for these ETFs marks a departure from the cash-only redemptions seen in the U.S., offering advantages in terms of cost, taxes, and liquidity. This move is anticipated to have a substantial impact on the Asian cryptocurrency market, potentially directing significant investments into approved portfolios. The shift underscores a deeper familiarity with crypto assets in the region, compared to the U.S., and highlights the evolving landscape of cryptocurrency investments globally.

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