How Are Hong Kong Firms Preparing For Spot Bitcoin ETFs? OSL Exec Shares Details

OSL Group executive Gary Tiu recently joined Bloomberg’s ‘The China Show’ to discuss the spot Bitcoin ETFs (Exchange-Traded Funds) landscape in Hong Kong. During the interview, Tiu also spoke about the prospect of a spot Ethereum ETFs launch in the future.

When Are Spot Bitcoin ETFs Launching In Hong Kong?

Gary Tiu, OSL’s Executive Director and Head of Regulatory Affairs, spoke with Yvonne Man and Annabelle Droulers about the digital asset firm’s expectation for spot Bitcoin ETFs in Hong Kong and the preparations regarding the investment products.

The executive shared a prediction of when the ETFs will be launched in the interview. Despite not giving an exact timeline, Tiu feels optimistic and considers that the initiatives on spot Bitcoin ETF “that are being talked about” will hit the market in the next few months.

After the successful launch of ETFs in the US, interest in these products has soared from traditional investors and institutions. Some of the interest has been focused on other countries’ options to launch a Bitcoin ETF and whether the US regulator will approve other crypto-based Exchange-Traded Products.

Regarding the anticipation around the launch of a spot Ethereum ETF worldwide, the executive deems the race as “more interesting” since the product is yet to be approved in the US by the Securities and Exchange Commission (SEC):

I think there’s definitely a more global race on now for who can actually come to the market with the first product. A lot of the issues we talk about are sensitive to market timing. Being first to market is going to be critical for the players that are investing in that space.

How Is The OSL Group Preparing For An ETF Launch?

The OSL executive considers that there will be a lot of investor interest in Bitcoin ETFs if launched in Hong Kong. Based on US interests and developments, the digital asset company is taking note of the substantial effort that’s been put into the products and the infrastructure needed to “get an ETF out.”

Moreover, Tiu commented on the readiness and broadness of Hong Kong’s ecosystem to advert a “concentration risk” as the legal framework for the ETFs will “rely on Hong Kong’s licensed companies.”

The executive believes that OSL Group is ready as it has been operating for over three years as a licensed platform. Tiu highlights that OSL isn’t the only licensed company in the market.

However, he considers that what’s most important for a successful ETF is a competitive landscape with incentivized market makers:

So, I guess from another perspective, the ETF isn’t even just about the trading platforms that have to support the product. The market makers are the ones who support liquidity on the exchange. (…) We want market makers to be properly incentivized so that they can do very, very tight pricing on the exchange because really that’s how ETFs are distributed on the market.

Additionally, the Head of Research commented on the general operating model that will differentiate the US ETFs from Hong Kong’s, considering that these differences will give them an edge regarding fees and execution costs:

The Hong Kong operating model will allow the fund to directly receive BTC from subscribers and to pay out crypto assets or bitcoin in the case of the first products to pay out bitcoin to the investors in the case of redemptions.

So, this potentially does give the Hong Kong products a bit of an edge in terms of lowering execution costs. As opposed to having to always go into the market to buy, they can directly receive the bitcoin from investors.

Lastly, Tiu discussed the OSL Group state in the retail side of investments, acknowledging that the digital asset company has been “stronger” as an institutional platform.

Nevertheless, he highlighted that the recent capital injection brought a new management team with extensive retail expertise, potentially allowing the company to launch a “quality retail platform.”