Hong Kong's financial market welcomed a significant development with the launch of the first batch of spot Bitcoin (BTC) and Ethereum (ETH) Exchange Traded Funds (ETFs). Issued by three major Chinese asset management firms—Bosera International, China Asset Management (Hong Kong), and Harvest Global Investments—these six ETFs began trading on the Hong Kong Stock Exchange (HKEX) on April 30, 2024.
This guide provides a detailed comparison of these innovative investment products, covering their management fees, ticker symbols, asset sizes, and unique features, to help investors make informed decisions.
Key Features of Hong Kong's Crypto Spot ETFs
The introduction of these ETFs offers a regulated and accessible way for investors to gain exposure to leading cryptocurrencies without the complexities of direct ownership, such as private key management and storage security.
| Issuer | Bosera | ChinaAMC | Harvest |
|---|---|---|---|
| BTC ETF Ticker | HKD: 3008 USD: 9008 | HKD: 3042 USD: 9042 CNY: 83042 | HKD: 3439 USD: 9439 |
| ETH ETF Ticker | HKD: 3009 USD: 9009 | HKD: 3046 USD: 9046 CNY: 83046 | HKD: 3179 USD: 9179 |
| Net Asset Value (USD) | BTC: ~$148M<br>ETH: ~$15.8M | BTC: ~$181.49M<br>ETH: ~$21.44M | BTC: ~$28.37M<br>ETH: ~$6.25M |
| Primary Market Min. Creation | 50,000 shares | 100,000 shares | 100,000 shares |
| Secondary Market Lot Size | 100 shares | 100 shares | 100 shares |
| Trading Counters | USD / HKD | USD / HKD / CNY | USD / HKD |
| Management Fee (p.a.) | 0.60% | 0.99% | 0.3% |
| Estimated Ongoing Expense Ratio# | 0.85% | 1.99% | 1.0% |
| Estimated Tracking Difference* | -0.85% | -1.99% | -1.0% |
| Creation/Redemption | In-kind (Crypto) or Cash | In-kind (Crypto) or Cash | In-kind (Crypto) or Cash |
| Underlying Index | CME CF Bitcoin & Ether Asia Pacific Reference Rates | CME CF Bitcoin & Ether Asia Pacific Reference Rates | CME CF Bitcoin & Ether Asia Pacific Reference Rates |
Data as of February 28, 2025. #These are estimates for new funds; actual figures may vary.
ETF Investment Objective
The primary goal of all six ETFs is to provide investment returns that, before fees and expenses, closely correspond to the performance of their respective underlying indices: the CME CF Bitcoin Reference Rate (Asia Pacific) and the CME CF Ether Reference Rate (Asia Pacific).
This means the ETFs are designed to track the spot price of Bitcoin and Ethereum, allowing investors to gain exposure to these digital assets' price movements through a traditional securities account. However, it is crucial for investors to factor in the management fees and other ongoing expenses, which can erode returns over time.
How to Invest in Hong Kong's Crypto ETFs
Investors can access these ETFs through two main channels: the primary (creation) market and the secondary (trading) market.
Primary Market (Creation/Redemption)
This method is intended for larger, institutional investors. Investors can work with participating dealers (APs) like Victory Securities or Eddid Securities to create new ETF shares or redeem existing ones.
A key advantage is the ability to use in-kind transfers. This means an investor can use their actual Bitcoin or Ethereum to create ETF shares, and vice versa, which can be more tax-efficient than using cash. However, the minimum creation unit is very high (50,000 or 100,000 shares), making it impractical for most retail investors. Additional fees for creation and redemption may also apply.
Secondary Market (Stock Exchange)
For most individual investors, the secondary market is the preferred and most straightforward method. Investors can simply buy and sell ETF shares on the Hong Kong Stock Exchange through their regular brokerage account, just like any other stock.
- Lot Size: The standard trading lot is 100 shares.
- Currencies: ETFs can be traded in HKD and USD counters; ChinaAMC's funds also offer a CNY counter.
- Fees: Investors will pay standard brokerage commissions. The annual management fee is automatically deducted from the fund's net asset value.
👉 Explore more strategies for investing in digital assets through traditional markets
Understanding the Underlying Indices
The ETFs track benchmarks provided by CF Benchmarks Ltd., a regulated benchmark administrator.
- CME CF Bitcoin Reference Rate (BRRAP): This index determines a daily once-a-day Bitcoin reference rate priced at 4:00 PM Hong Kong Time. It aggregates trade data from major cryptocurrency exchanges (including Coinbase, Bitstamp, and Kraken) during a one-hour observation window (3:00 PM - 4:00 PM HKT) to calculate a volume-weighted median price.
- CME CF Ether Reference Rate (ETHUSD_AP): This index follows the same methodology as the Bitcoin index but is calculated based on ETH/USD trading pairs to establish a daily Ether reference rate at 4:00 PM HKT.
These indices provide a transparent and robust pricing mechanism for the ETFs.
Key Considerations and Risks for Investors
While these ETFs simplify crypto exposure, they come with unique risks that differ from direct cryptocurrency ownership.
Trading Hours Mismatch
Cryptocurrency markets operate 24/7, while the HKEX has specific trading hours and is closed on weekends and holidays. This creates a potential for significant price gaps. If the price of Bitcoin or Ethereum moves sharply when the HKEX is closed, the ETF will likely open at a much higher or lower price, leading to heightened volatility. This makes the product generally more suitable for longer-term investment horizons.
Tracking Difference Risk
An ETF's performance will inevitably lag behind its underlying index due to fees and expenses. The Ongoing Expense Ratio (which includes the management fee, custodian fees, and other operational costs) directly impacts returns. For example, a fund with a 1.99% expense ratio must generate a return that exceeds that percentage just to break even with the index's performance. Investors should monitor the funds' published Tracking Difference (TD) and Tracking Error (TE) metrics.
Counterparty and Custodial Risk
Although the ETFs are regulated, investors are exposed to the risks associated with the fund's structure. This includes the reliability of the custodian (Bank of China International Trustees Limited) and the sub-custodians (OSL Digital Securities and HashKey Blockchain) that hold the actual cryptocurrencies.
Frequently Asked Questions
Q1: What is the main advantage of investing in a spot crypto ETF versus buying crypto directly?
The primary advantage is convenience and security. ETFs allow investors to hold cryptocurrency exposure within a traditional brokerage account, eliminating the need to manage private keys, use digital wallets, or worry about the security of a crypto exchange. They also simplify the process for tax reporting.
Q2: Can US investors buy these Hong Kong-listed crypto ETFs?
Generally, US investors face restrictions in purchasing foreign-domiciled ETFs that are not registered with the SEC. These Hong Kong ETFs are primarily intended for investors in Asia and may not be readily available or suitable for US persons due to regulatory complexities. US investors typically have access to SEC-approved spot Bitcoin ETFs listed domestically.
Q3: How do the management fees of Hong Kong's ETFs compare to those in the US?
Hong Kong's fees are currently higher on average. The management fees range from 0.3% to 0.99%, with total expense ratios potentially reaching up to 1.99%. In contrast, several major US spot Bitcoin ETFs have fees below 0.30%. This difference is a critical factor for investors to consider when evaluating long-term cost efficiency.
Q4: What is the tax implication of investing in these ETFs?
The tax treatment depends on the investor's jurisdiction of residence. In some regions, investing in an ETF may be treated as a security (potentially subject to capital gains tax), which can be different from the tax rules for directly holding a cryptocurrency. It is essential to consult with a local tax advisor for guidance specific to your situation.
Q5: Do these ETFs actually hold Bitcoin and Ethereum?
Yes, as spot ETFs, they are required to hold the physical underlying assets. The issuers use licensed custodians to securely store the actual Bitcoin and Ethereum that back the value of each ETF share.
Q6: How can I find the real-time net asset value (NAV) of these ETFs?
The NAV is typically published daily on the official websites of the fund issuers (Bosera, ChinaAMC, and Harvest). Your brokerage platform may also display this information alongside the ETF's market price.
Glossary: Bitcoin and Ethereum Basics
Bitcoin (BTC) is the first and largest cryptocurrency by market capitalization. Launched in 2009, it operates on a decentralized peer-to-peer network using a Proof-of-Work (PoW) consensus mechanism. Its primary value proposition is as a decentralized store of value and digital gold. New bitcoin are created through a process called mining, where miners compete to solve complex mathematical problems to validate transactions and secure the network.
Ethereum (ETH) is more than just a digital currency; it is a decentralized global software platform powered by its native token, Ether (ETH). Its key innovation is the introduction of smart contracts—self-executing contracts with the terms directly written into code. This functionality has made Ethereum the foundation for much of the decentralized finance (DeFi), non-fungible token (NFT), and decentralized application (dApp) ecosystem. It uses a Proof-of-Stake (PoS) consensus mechanism.
Disclaimer: This content is for informational and educational purposes only and does not constitute financial, investment, or other professional advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Investment values can go down as well as up.