OKG Research researcher: Allowing physical redemption of virtual asset spot ETFs proves that Hong Kong has sufficient confidence and ability

Jason Jiang, a researcher at OKG Research, said that allowing physical redemption of virtual asset spot ETFs in Hong Kong not only increases the flexibility and inclusiveness of ETF products, but also has a certain arbitrage space, making it attractive not only to traditional financial investors, but also to the crypto investment community. However, increasing physical redemption will greatly increase product risk, as it involves on-chain processes such as Bitcoin and Ethereum spot to exchange, custody and conversion, and the increase in business process complexity will lead to multiple risks.
This time, Hong Kong allows physical redemption, on the one hand because Hong Kong has established a relatively complete VA supervision system, and the risks that may arise in the process of physical redemption should be expected. Secondly, Hong Kong has made rapid progress in RegTech in recent years, enabling it to have sufficient technical capabilities and confidence to deal with the risks associated with the operation of ETF products.