Hong Kong Bitcoin And Ether ETF Structures Unveiled Before April 30 Launch

Here are some of the major developments from the world of crypto over the past few days.
Some of the major developments from the world of crypto.
Some of the major developments from the world of crypto.

Hong Kong Bitcoin and Ether exchange-traded funds (ETFs) will differ significantly from their United States counterparts, as the city's regulator has approved them for launch on April 30. According to a report by one of the issuers, ChinaAMC, its spot Bitcoin and Ether ETFs will track the performance of the Chicago Mercantile Exchange's crypto indices. Redemptions will be available in both fiat currency and crypto deposits.

Additionally, ChinaAMC's crypto ETFs will be denominated in three currencies: the U.S. dollar, Hong Kong dollar, and Chinese yuan. Investment asset manager BOCI-Prudential and crypto exchange OSL will serve as the custodians for the ETFs. On April 24, Bloomberg senior ETF analyst Eric Balchunas stated that Hong Kong Bitcoin ETF management fees will range from 0.3% to 0.99%. This is significantly higher than U.S. spot Bitcoin ETFs, where some issuers charge less than 0.25% annually.

The two aforementioned firms will also custody spot Bitcoin and Ether ETF assets for issuer Gather International. All three ETF issuers will create and redeem ETF shares on Hong Kong's regulated crypto exchanges, OSL and HashKey. Daily, investors will have until 11:00 a.m. local time to redeem their shares for cash or until 4:00 p.m. for crypto withdrawals. BOCI Prudential will serve as the custodian for all issuers, while market makers include Vivienne Court, Virtu Financial, and others.

BNB Chain to Introduce Native Liquid Staking on BSC

BNB Chain has announced that it will enable native liquid staking on its BNB Smart Chain (BSC) as part of its strategy to migrate the functions of the BNB Beacon Chain to BSC as the former is wound down. BNB Chain noted that the BNB Beacon Chain will be fully shut down by June 2024. However, the company stated that it will transfer its features to the BSC before the closure, as reported by Cointelegraph.

BNB Chain stated that enabling liquid staking on BSC will allow ecosystem participants to secure the network while maintaining the liquidity of their assets. While the organization did not provide a specific date for the rollout of the liquid staking feature, BNB Chain mentioned that it will occur in April or May. The team also added that the move is part of the company’s growth plans to make the BNB Chain more appealing to users.

BNB Chain explained that with this feature, users can engage in decentralized finance activities without sacrificing the utility of the asset, as they will have liquid staking tokens representing their staked crypto assets. The liquid staking and the maximum extractable value (MEV) optimization for the BNB Chain will be rolled out together. Validators with MEV enabled will have the opportunity to enhance their staking returns through MEV revenue, which will ultimately be factored into Liquidity Staking rewards.

European Union (EU) Implements Cryptocurrency Regulations to Combat Money Laundering

The European Parliament recently approved new regulations targeting cryptocurrency companies to combat money laundering, establishing formal due diligence obligations. These laws aim to enhance due diligence measures and identity checks for customers, including entities like crypto asset managers, who must also report suspicious activities. The Markets in Crypto-Assets (MiCA) regulatory framework, initiated by the EU in June 2023, will oversee digital assets and their markets, becoming fully enforceable by year-end.

To supervise these regulations, a new agency called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) has been designated. AMLA's office will be based in Frankfurt, Germany. Although the law has not been formally adopted by the Council or published in the EU Office Journal, Patrick Hansen, EU strategy and policy director at Circle, expressed anticipation for the vote’s outcome, expecting the package to be adopted by the Council of the EU and take effect in three years.

Hansen described the final version of the regulations as a positive result for the crypto sector, highlighting industry efforts in advocating for a risk-based approach with multiple options. Earlier versions of the proposed AMLR had suggested a stricter approach, requiring KYC on the self-custody originator/beneficiary. Recent developments include the removal of the 1,000-euro ($1,080) limit on cryptocurrency payments from self-hosted wallets by a majority of the European Parliament's lead committees, reflecting ongoing refinements in EU cryptocurrency regulation.

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