Good morning, Asia. This is what makes news in the market:
Welcome to Asian morning briefings, daily summary of top stories throughout the US time, and an overview of market movements and analysis. For a detailed overview of the US market, see Coindesk’s Crypto Daybook Americas.
On Wednesday in the US, the Securities and Exchange Commission announced that investors are permitted to redeem Bitcoin and Ether Exchange Trade Funds (ETFs) in kind.
This decision allows institutional traders to increase efficiency by creating and redeeming ETF stocks directly in BTC or ETH, avoiding Fiat conversion.
But in Hong Kong, this is nothing new. In late 2023, early in the regulatory process, the Securities and Futures Commission, the city’s market regulator, bringing crypto ETFs to the market (starting in April 2024), mentioned in cycles that redemption is permitted in the concept.
Part of the reason they were allowed was technical: ETF publishers had to partner with licensed local crypto exchanges and use custody solutions. This was not the first time in Ontario, Canada, that it had a crypto ETF. Furthermore, the US in Hong Kong had no argument as the state of ether in the US.
In contrast, US regulators struggled with concerns about custody, anti-money laundering risks, and potential market manipulation.
The SEC did not expressly prohibit redemption of physical institutions, but ETF sponsors had to remove them early. The committee supported the cash-only approach as a careful first step, citing untested operational processes and uncertainty regarding how to securely resolve large-scale cryptotransfers.
That stance wasn’t without an internal pushback. SEC Commissioner Mark Weda publicly criticized the agency’s approach during the January 2024 approval of the Spot Bitcoin ETF.
He pointed out that merchandise-based ETFs, like gold-backed ETFs, used redemption on a daily basis, questioning why Crypto is treated differently.
Uyeda argued that despite a clear departure from standard ETF practices, the SEC failed to explain why it viewed cash-only redemption as “non-novel,” and warned that the lack of reasoning set a troublesome precedent.
This episode highlights how it became clearer and united from the start, since Hong Kong’s regulators brought these products to the market.
The SFC avoided the internal contradictions and policy drift that defined US deployments by enabling early redemptions and combining them with strict licensing and custody requirements.
However, there is one side effect from all of these: the tracking flow.
Crypto Data Aggregator SosoValue offers daily flow updates for Crypto ETFs, warning that “physical Bitcoin subscriptions do not generate cash inflows for (ETFs) and therefore cannot simply count in daily net inflow statistics.”
They tried to create a method and model to avoid this, but say it has failed so far.
So, tracking this metric will be a problem unless US ETF issuers publish their daily flows in cash and crypto. And it shows the sentiment of asset class investors, so it’s important to track.
Market movements
BTC: Bitcoin has been trading above $117,500 after a modest rebound, but its momentum remains weaker as ETF outflows persist, with whales earning nearly $118K and macro headwinds continue to limit the cap, including corporate dollars and Hawkish’s Fed’s expectations.
ETH: ETH is traded for over $3,700. “Ethereum has proven in parallel with BTC that BTC is the second most combat-tested network, and now it is likely that, along with Bitcoin, tokens are considered as a formidable asymmetrical bet.”
Gold: Gold rebounded to $3,334 on Tuesday, snapping a four-day losing streak ahead of the Fed Conference.
Nikkei 225: The Asia-Pacific market was mixed as U.S. Secretary of Commerce Howard Lutnick confirmed that Trump’s Friday tariff deadline would go as planned, and Japan’s Japan 225 was open and flat.
S&P 500: US stocks closed on Tuesday, and the S&P 500 concluded its six-day record winning streak as it considered revenue, economic data and future Fed rate decisions.
Other locations in the code:
Tornado cash developer Roman Storm will not stand up, lawyers say (Coindesk) Technical Professor Cornell warns AI agents and cryptography spell trouble (Bloomberg) Sen. Lummis introduces a bill that requires Fannie Mae and Freddie Mac to consider Crypto as a mortgage asset (block)
