This comprehensive guide explores the process of physically subscribing to Hong Kong's Bitcoin and Ethereum spot ETFs through Victory Securities, the first approved participating securities dealer for primary market subscriptions.
Introduction: Hong Kong's Crypto ETF Milestone
The approval of Bitcoin and Ethereum spot ETFs has become the focal point of Hong Kong's financial market in April. On April 15, three major mainland public fund subsidiaries—Bosera Funds (International) Limited, ChinaAMC (Hong Kong) Limited, and Harvest Global Investments Limited—announced receiving approval from the Hong Kong Securities and Futures Commission (SFC) to offer virtual asset management services.
Key Highlights:
- Victory Securities emerges as Hong Kong's first securities dealer enabling Bitcoin and Ethereum physical subscriptions in the primary market.
- Physical subscriptions provide a compliant "exit channel" for virtual assets amidst banking restrictions.
- The guide covers account opening, subscription processes, fees, arbitrage opportunities, and tax implications.
Why Physical Subscriptions Matter
For virtual asset investors, security and compliance are paramount. Spot ETFs address two critical concerns:
- Enhanced Security: ETF issuers collaborate with reputable custodians to mitigate hacking risks and simplify private key management.
- Regulatory Clarity: SFC-regulated ETFs offer institutional investors diversified exposure, especially with Ethereum spot ETFs yet to be approved in the U.S.
Victory Securities: The Gateway to Primary Market Subscriptions
Licensing and Advantages
- Licenses Held: Virtual Asset 1 (trading), 4 (advisory), and 9 (management) licenses.
- Retail Access: First Hong Kong券商 approved to serve retail investors.
- Innovation: Pioneered "coin-in/coin-out" transactions via the VictoryX app.
Subscription Guidelines
Eligibility Requirements
- Restrictions: Mainland Chinese investors are prohibited from purchasing these ETFs.
- Hong Kong Residents/Companies: Must comply with local regulations and provide necessary documentation.
Account Opening Process
For Mainland Residents (Personal Account):
Documents Required:
- Mainland ID card
- Bank card (for verification only)
- Proof of address (if different from ID)
- Hong Kong bank account
For Hong Kong Residents/Companies:
- Similar requirements, including ID proof and address verification.
Virtual Asset Account Addition:
After standard account setup, submit:
- Virtual Asset Trading Agreement
- Risk Disclosure Statement
- Risk Tolerance Questionnaire
- Virtual Asset Knowledge Questionnaire
Physical Subscription Process (Bitcoin/Ethereum)
- Open Account: Complete Victory Securities account setup.
- Deposit Assets: Transfer BTC/ETH to Victory’s exchange account.
- Subscription: Investment manager verifies suitability and processes ETF purchase.
- Settlement: ETF shares are transferred to the client’s account.
Cash Subscription Process
- Steps mirror physical subscriptions, with cash deposits replacing crypto transfers.
Fee Structure
(Details to be finalized post-ETF launch.)
Arbitrage Opportunities
- Primary-to-secondary market price discrepancies may create short-term arbitrage windows.
- Physical redemptions allow "coin-for-coin" exits, minimizing downside risk.
Tax Considerations
- Individuals: Capital gains from ETF sales are generally tax-free in Hong Kong.
- Corporations: Profits taxed at 8.25% (first HKD 2M) or 16.5%. Dividends typically tax-exempt.
FAQs
Q1: Can mainland Chinese investors participate?
A: No. SFC regulations prohibit sales to mainland investors.
Q2: What’s the minimum investment amount?
A: ETF providers will announce unit thresholds post-launch.
Q3: How long does account approval take?
A: Typically 3–5 business days with complete documentation.
Q4: Are there custody fees for physical holdings?
A: Yes, but Victory Securities will disclose details upon product listing.
Q5: Can I redeem ETF shares for crypto later?
A: Yes, physical redemptions are permitted under SFC rules.
👉 Explore Victory Securities’ ETF Services
Conclusion
Hong Kong’s Bitcoin and Ethereum spot ETFs mark a significant step in bridging crypto and traditional finance. While the market’s scale is smaller than the U.S., its clear regulatory framework fosters innovation.
Will Hong Kong rival the U.S. in crypto ETF leadership? The journey begins now.