It is expected that Hong Kong's Bitcoin and Ethereum ETF assets will reach US$1 billion within two years

Bloomberg analysts revised their forecasts to about $500 million in inflows over the same period.

Eric Balchunas, senior ETF analyst at Bloomberg, previously estimated that the funds would attract about $500 million in inflows over the same period due to doubts about Chinese investor eligibility and a lack of maturity in Hong Kong's ETF market.

Unknown Investment Exposure for Chinese Investors

Eric Balchunas highlighted the challenges faced by Chinese investors seeking access to newly approved ETFs in Hong Kong.

Eric Balchunas, a senior ETF analyst at Bloomberg, highlighted the challenges Chinese investors face when investing in newly approved ETFs in Hong Kong.

Citing a report by colleague Rebecca Sin, Balchunas highlighted that China's ban on underlying assets associated with these ETFs has complicated accessibility for interested investors in the jurisdiction.

China has long imposed strict regulations on the emerging Crypto Assets industry. The country initially banned Crypto Assets in 2013 and extended restrictions to the mining industry in 2021.

In addition, Sin's analysis notes that retail investors in China may try to circumvent this restriction by using the $50,000 remittance quota to invest in these ETFs.

However, the viability of this investment route remains uncertain for institutional investors due to its limited functionality, as well as potential regulatory hurdles that may arise.

Assets Under Management (AU****M) reached US$1 billion

Although these restrictions pose a significant challenge to Hong Kong-listed encryption ETF, analysts still expect them to attract a lot of interest and predict that their Assets Under Management will reach $1 billion in the first two years.

Balchunas explained that reaching the US$1 billion milestone relies on significant improvements to Hong Kong's financial infrastructure and ecosystem.

Currently, the Bitcoin ETF Assets Under Management in the Asia-Pacific region is US$250 million, spread across 5 ETF, 3 in Hong Kong and 2 in Australia. The largest fund is the Hong Kong-listed CSOP Bitcoin futures ETF with $121 million in Assets Under Management.

Of the three companies preparing to launch Spot ETF, Bosera Asset Management and Harvest Fund Management jointly manage nine ETF worth a total of $50 million. In contrast, ChinaAMC, which has 15 ETF and $3.6 billion in Assets Under Management, is a significant player and is expected to have a considerable impact when it launches its Spot encryption ETF.