Hong Kong Bitcoin and Ethereum Spot ETF Victory Securities Primary Market In-Kind Subscription Guide
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Hong Kong Bitcoin and Ethereum Spot ETF Victory Securities Primary Market In-Kind Subscription Guide
This article will compile and organize relevant information regarding the physical subscription for Hong Kong spot Bitcoin and Ethereum ETFs in the primary market of Victory Securities.
Navigating Web3 tides with focused insightsAuthor: Bowen, White Dew Salon
The approval timeline for spot Bitcoin and Ethereum ETFs is undoubtedly the top focus of the Hong Kong market in April.
On April 15, subsidiaries in Hong Kong of three major mainland public fund managers—Bosera Fund (International) Limited, ChinaAMC (Hong Kong) Limited, and Harvest Fund Management International Asset Management Limited—announced on the same day that they had received approval from the Securities and Futures Commission (SFC) to offer virtual asset management services to investors, and plan to launch spot virtual asset wealth management products. Victory Securities, as the first securities firm in Hong Kong capable of using Bitcoin and Ether for primary-market subscriptions, will simultaneously initiate physical creation for spot Bitcoin and Ethereum ETFs.
For further news, see: Approved as early as next Monday! Assessing the strength of seven Hong Kong spot Bitcoin ETF applicants
For virtual asset investors, physical subscription is one of the most significant highlights of Hong Kong's upcoming spot Bitcoin and Ethereum ETFs. Especially given that most banks in Hong Kong still maintain a less-than-friendly stance toward "withdrawing funds" virtual assets from exchanges, the listing of these ETFs opens a compliant channel for such withdrawals—playing a crucial role in boosting market confidence.
In this article, White Dew Salon compiles and organizes key information about Victory Securities' role in facilitating primary-market physical subscriptions for Hong Kong's spot Bitcoin and Ethereum ETFs, covering account opening requirements and procedures, physical subscription processes, fees, arbitrage opportunities in new share offerings, and more, helping investors prepare ahead of time.
Advantages of Spot Virtual Asset ETFs
For virtual asset investors, security remains the top priority. On one hand, blockchain networks are prone to hackers, which could lead to irreparable losses; on the other, regulatory uncertainty poses ongoing compliance risks. The emergence of spot ETFs offers excellent solutions to both critical issues.
ETF providers will collaborate closely with reputable large-scale custodians, reducing risks from hacking and fraud while also relieving investors of the burden of managing private keys and wallets, providing greater technical convenience. Moreover, since spot Bitcoin and Ethereum ETFs undergo strict review and oversight by the Hong Kong SFC, their legal and compliant nature provides traditional institutions with more diversified and liquid investment options. Particularly notable is that the U.S. SEC has yet to approve a spot Ethereum ETF—the launch of Hong Kong’s spot Ethereum ETF could therefore offer institutions additional risk exposure, representing an unmissable market opportunity.
Currently, Victory Securities Is Required for Primary-Market Physical Subscription to ETFs
According to SFC regulations, if spot Bitcoin and Ethereum ETFs adopt in-kind subscription/redemption mechanisms, virtual assets must be transferred into or out of the fund’s custodial account through SFC-authorized institutions. Victory Securities leads in compliance and has become the first brokerage in Hong Kong authorized to conduct primary-market physical subscriptions for Bitcoin and Ether.
Within Hong Kong’s virtual asset regulatory progression, Victory Securities has established a clear first-mover advantage as a representative brokerage. It holds SFC licenses Type 1 (Dealing in Virtual Assets), Type 4 (Advising on Virtual Assets), and Type 9 (Asset Management), making it the first brokerage in Hong Kong permitted to offer virtual asset services to retail investors. This full licensing allows Victory Securities to commence operations earlier than others.
Recently, Victory Securities became the first brokerage approved by the SFC to support cryptocurrency deposits and withdrawals ("coin-in, coin-out"), launching VictoryX, a multi-market trading app covering virtual assets, Hong Kong stocks, and U.S. stocks. Its timely release aligns perfectly with the ETF launch schedule, offering Victory Securities a rapid growth opportunity.
Physical Subscription Details for Investors
Following the approval of the first batch of spot Bitcoin and Ethereum ETFs, Victory Securities will be the sole channel for participating in primary-market physical subscriptions. Below, we summarize practical guidelines for subscribing via Victory Securities to help investors better understand the process.
Investor Eligibility
Under current Hong Kong trading rules, anyone purchasing an ETF must meet minimum thresholds for fund units, which vary across products and affect transaction costs.
There are investor restrictions in place. According to the Joint Circular, sales of virtual asset-related products must comply with relevant jurisdictional requirements—specifically, spot virtual asset ETFs are prohibited from being sold to Mainland Chinese investors. These products are not offered directly or indirectly to legal entities or individuals in Mainland China, nor for their benefit. Without prior necessary government approvals in Mainland China, such individuals or entities may not purchase Bitcoin ETFs directly or indirectly.
Whether “Southbound Funds” can be used to invest in spot virtual asset ETFs remains uncertain, though feasibility appears low at present.
Account Opening Requirements at Victory Securities
Visit the Victory Securities official website and navigate to “Customer Service” – “Open Account” to access the account opening guide. Alternatively, download the “VictoryX” app from the website homepage and click “Open Account Now” to begin the process quickly.
Mainland Chinese residents opening personal accounts need to prepare the following documents:
(i) Mainland Chinese second-generation ID card;
(ii) A named debit card from a mainland Chinese bank. This card is solely for identity verification purposes and cannot be used for any fund inflows or outflows related to the Victory account;
(iii) An email address to receive notifications and account information from Victory;
(iv) If the declared address differs from that on the ID card, a copy of an address proof issued within the last three months (e.g., tax bill, utility bill, bank statement);
(v) A Hong Kong bank account (for fund transfers after account setup).
Hong Kong residents opening personal accounts need to prepare the following documents:
(i) Hong Kong resident identity card;
(ii) A copy of an address proof issued within the last three months (e.g., tax bill, utility bill, bank statement);
(iii) An email address to receive notifications and account information from Victory;
(iv) A Hong Kong bank account.
Hong Kong companies opening corporate accounts need to prepare the following documents:
(i) Copy of board resolution;
(ii) Copies of identification documents/passports and recent three-month address proofs for: all directors, authorized traders, authorized signatories (as determined by the board), and ultimate beneficial owners (holding 10% or more of final equity/shares);
(iii) Certificate of Incorporation (CI) and any subsequent certificate of name change;
(iv) Company constitution or articles of association;
(v) Company address proof;
(vi) Company bank account proof;
(vii) Latest annual return, all subsequent notices of changes in secretary or directors (appointments/resignations) (Forms D2A/ND2A), and share allotment forms (Forms SC1/NSC1) or transfer instruments detailing current shareholders (if applicable);
(viii) Valid Business Registration Certificate (BR);
(ix) Corporate ownership structure chart (can be signed by a director).
Overseas companies opening corporate accounts need to prepare the following documents:
(i) Copy of board resolution;
(ii) Copies of identification documents/passports and recent three-month address proofs for: all directors, authorized traders, authorized signatories (as determined by the board), and ultimate beneficial owners (holding 10% or more of final equity/shares);
(iii) Certificate of Incorporation (CI) and any subsequent certificate of name change;
(iv) Company constitution or articles of association;
(v) Company address proof;
(vi) Company bank account proof;
(vii) Director register & shareholder register;
(viii) Certificate of Incumbency (issued within the last six months) (these two items can be obtained via local corporate service providers or intermediaries);
(ix) Corporate ownership structure chart (can be signed by a director).
To open a virtual asset trading account, investors must first complete the standard individual or corporate securities account opening, then electronically or manually submit four additional documents:
(i) Addendum Agreement for Virtual Asset Trading;
(ii) Supplementary Risk Disclosure Statement for Virtual Assets;
(iii) Risk Tolerance Questionnaire;
(iv) Virtual Asset Knowledge and Experience Questionnaire.
Primary-Market Bitcoin and Ethereum Subscriptions
After setting up a securities account, investors holding Bitcoin and Ether can follow the illustrated steps below to perform physical subscriptions for spot Bitcoin and Ethereum ETFs.
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Account Opening: Clients must open a securities account with Victory Securities;
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Coin Deposit: Clients deposit Ether / Bitcoin into Victory Securities’ exchange account;
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Execution: After communicating with the client, assessing financial status, investment goals, and suitability, the investment manager confirms the client is suitable for in-kind subscription to Ether / Bitcoin ETFs, then sends the subscription instruction to Victory Securities, which uses the deposited Ether / Bitcoin to subscribe for corresponding ETF shares;
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Settlement: Victory transfers the ETF shares to the client’s account and sends daily/monthly statements to the client’s email.
Primary-Market Cash Subscription
New investors may choose cash subscriptions to participate in primary-market offerings of spot ETFs. While this carries slightly higher risk compared to in-kind subscriptions, it still offers significantly improved asset security and compliance over direct virtual asset investments.
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Account Opening: Client opens an account with Victory Securities;
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Order Placement: Client submits trade instructions to Victory Securities, which handles the subscription;
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Funding: Client deposits funds into Victory Securities, which then transfers funds to the ETF’s custodian bank;
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Settlement: HKSCC allocates shares to Victory Securities, which then credits the shares to the client’s account and sends daily/monthly statements to the client’s email.
Subscription Fees
Arbitrage Opportunities in New Share Offerings
Notably, physically subscribing for spot Bitcoin and Ethereum ETF shares may offer arbitrage opportunities. Due to the large number of brokers and users in the secondary market, along with varying capital sizes, shares subscribed in the primary market often trade at a premium in the secondary market, implying compliant profit-taking opportunities.
Even if the secondary market underperforms, investors can redeem shares in-kind (“coin-in, coin-out”), preserving their original virtual asset holdings and minimizing downside risk.
Tax Treatment
Taxation of Bitcoin ETFs involves capital gains tax, income tax, and withholding tax, depending on the ETF’s jurisdiction and structure, the investor’s residence, and the regulatory environment of the investment target. Selling ETF shares triggers a capital gains event, whereas redemptions are typically non-taxable. Additionally, dividends from Bitcoin ETFs in other jurisdictions may incur withholding taxes.
Hong Kong operates on a territorial basis for taxation, levying taxes only on profits and income sourced in Hong Kong. It does not impose capital gains tax on either individuals or corporations. However, if holdings are short-term, capital gains from selling shares may be deemed trading income and thus subject to profits tax. Therefore, capital gains realized by Hong Kong residents from selling Bitcoin ETFs are generally not subject to profits tax, and dividend income from Bitcoin ETFs received in Hong Kong is typically tax-free.
For Hong Kong enterprises, capital gains from selling Bitcoin ETFs are taxable. The first HKD 2 million of assessable profits are taxed at 8.25%, with rates rising to 16.5% thereafter. For unincorporated businesses (sole proprietorships or partnerships), the respective rates are 7.5% and 15%. Corporate investors generally do not pay tax on dividend income from Bitcoin ETFs.
Conclusion
With the arrival of spot Bitcoin and Ethereum ETFs, a new chapter begins in the global competition between Eastern and Western virtual asset markets. Though smaller in scale, Hong Kong’s market benefits from a clear regulatory framework and favorable policy environment, making it more conducive to innovation and integration with traditional finance.
When will Hong Kong leverage its strengths to rival the United States? We wait and see.
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