Exclusive interview with Harvest International CEO: Just to defend Hong Kong’s status as an international financial center

On April 24, Harvest Global Investments Limited announced that the Hong Kong Securities and Futures Commission (SFC) has officially approved the Harvest Bitcoin Spot ETF and the Harvest Ethereum Spot ETF, and the Hong Kong Stock Exchange will Trading of these two ETF products will begin on April 30. In order to better understand the story behind Harvest’s ETF product issuance, we interviewed Han Tongli, CEO of Harvest International.

Techub News: First of all, congratulations to Harvest for obtaining approval from the Hong Kong Securities and Futures Commission (SFC) for its Bitcoin and Ethereum spot ETFs. Please tell me, what efforts did Harvest make in the process of applying for these two products?

Han Tongli: In the process of launching these two funds, Harvest has actually made a lot of efforts. To be very responsible, in the fund industry, Harvest may have contributed the most. As the founder, we started communicating with relevant institutions two years ago. At that time, the attitude of relevant institutions was very cautious and they also raised many challenges, such as how to do KYC/KYT (Know Your Token)? Physical subscription, including management from custody to cold wallet, how to ensure the security of the transaction? This is actually a very challenging process. All of these were first explored step by step by Harvest.

To be honest, I think the road ahead knows the power, and the past accumulation will definitely not be in vain. We must be the clearest about the entire process of ETF issuance and the understanding of technical risks.

But in terms of the overall situation, I think our competitors this time are not our peers in Hong Kong, but large fund companies in the United States. We are competing with them on behalf of Hong Kong, and we are defending and building Hong Kong’s status as an international financial center. Our ultimate goal is to build an ecosystem and make it bigger, so that everyone is a winner.

Harvest’s standing has always been very high. Many years ago, Harvest headquarters established an AI laboratory and a data laboratory. Three years ago, we established a team to study the blockchain industry. Blockchain is actually the infrastructure for interaction between AI and AI. With infrastructure, we also need value anchoring. We feel that the anchors in the future are likely to be Bitcoin and Ethereum, so we will launch these two ETFs.

To put it more broadly, this is to meet the diversified needs of investors in the market. On a larger scale, it is actually promoting the development of AI technology. We are building infrastructure, providing investors with a key to the future AI world, connecting the future AI world with the real financial world, and doing infrastructure work for the next generation of finance.

Techub News: What are the advantages of Hong Kong cryptocurrency spot ETFs compared to the United States?

Han Tongli: Although Hong Kong launched cryptocurrency ETFs about three months later than the United States, it has an obvious advantage over the United States. That is, Hong Kong cryptocurrency ETFs can not only be subscribed and redeemed with legal currency, but also support the use of Bitcoin. Or physical Ethereum. This innovation is of great significance and enriches the connotation of ETF. To put it simply, currency holders can now deposit their currency into ETFs, which is equivalent to having a bank account. During the subscription and redemption process, they can obtain compliant property certificates. This is undoubtedly a new option for natives in the currency circle who need to consider regulatory risks. The most difficult point in supporting the innovative mechanism of physical subscription and redemption is risk control. Because everything is groundbreaking and there are no lessons learned from the past. Secondly, there are innovations and breakthroughs in regulatory rules, which we have overcome bit by bit.

As for why the regulatory attitude of the United States is different from that of Hong Kong, I personally think that the reasonable logic is: one of the missions of Bitcoin since its inception is decentralization, which is very difficult for the United States, which issues world currency and collects seigniorage. Words are unfavorable. Regarding Bitcoin, the United States has always been willing to reject it but still welcome it. The reason for not liking Bitcoin is obvious, but the ambiguous reason is that the United States realizes that this technology represents the advanced productivity and production relations of mankind. Therefore, the United States passed a regulated Bitcoin spot ETF, but also set many restrictions, such as not supporting physical subscription and not approving Ethereum spot ETF. In comparison, the reason why Hong Kong can be more open lies in its special status. Hong Kong is the largest free port in the world. For the country, the Hong Kong market can be used as an experimental field for pilot trials and a sandbox deduction, so the policy will be more liberal than that of the United States.

Techub News: What do you think the market demand for Hong Kong cryptocurrency spot ETFs will be?

Han Tongli: I think the demand will be huge. First of all, it is undeniable that Bitcoin and Ethereum have developed into assets that cannot be ignored. From an investment perspective, we should all use this type of asset because its correlation with traditional assets is relatively low. Eggs cannot be put in one basket. The current common headache for all mankind is how to preserve wealth? The U.S. dollar is very strong. Compared with the U.S. dollar, the currencies of basically all countries in the world are depreciating, but the purchasing power of the U.S. dollar itself is also depreciating sharply because the inflation rate in the United States is quite high. It can be said that the US dollar monetary system has encountered a big bug. Now, with virtual currencies such as Bitcoin that can help preserve wealth, there will naturally be corresponding demand.

Regarding the question of whether the main buyers of spot ETFs will be institutions or retail investors, I think the main force will be both investors from the traditional financial world and owners of crypto assets, because our ETFs support physical subscription and redemption. It goes both ways. Compared with the one-way ETFs in the United States, Hong Kong’s ETFs truly build a bridge between the physical world and the virtual world.

Techub News: How accepting are Bitcoin and Ethereum spot ETFs from institutions or high-net-worth users among Harvest’s customer base?

Han Tongli: Everyone has high expectations for our products. Whether in the traditional financial world or in the currency circle, the launch of ETF products is very welcome. But the reality is that we still have a long way to go. There are many people who are badmouthing Hong Kong. Some small-scale market participants will even spread rumors that KYC information may be leaked, which has caused some users to wait and see. Market education must continue, and Hong Kong will need more time to prove that we are an open, inclusive, and compliant market. I am very confident about the future because we are heading in the right direction, and even if there is a long way to go, we will continue to do so firmly. We have been going for two years, from zero to the launch of ETF now. Harvest has done very hard, but we have not yet reached our end point.

Techub News: How much impact will the launch of the Hong Kong cryptocurrency spot ETF have on the entire crypto industry? After Harvest launches ETF, what is expected to be the size of the fund in a short period of time?

Han Tongli: It is difficult to give a clear answer to this question, because future facts will soon prove it. What is clear is that our goals are set high. Hong Kong has its own unique advantages and should not be worse than any ETF in the United States, or even surpass the United States. However, considering the current environmental factors, some users will choose to wait and see. But I believe that this kind of wait-and-see actually represents huge potential, and this potential is definitely greater than that of the United States. As for when this potential can be realized, it depends on the joint efforts of all of us.

Techub News: Harvest spent 2 years launching two ETFs and offering the lowest rates compared to others. Why is Harvest so determined?

Han Tongli: Harvest has always been a particularly sentimental organization. Why do you say that? One is our foresight. We have seen the future direction of technology, such as our AI laboratory and digital laboratory, which are particularly advanced in the industry. The second is our pattern, what we pursue is delayed gratification. Harvest has a slogan called “Invest in the future you want.” We are investing in our lives, doing meaningful things, and making investments and arrangements for a better future for mankind.

As for why our rates are so low, it’s because we have always adhered to the belief that we want to be long-term win-win partners with investors. We are not thinking in a zero-sum game, and we are not doing a short-sighted business. To be honest, the fees we charge now may just equal the operating costs, and the real income is close to zero. We are building a tall building and we have to mix cement and burn bricks. Of course, we also have a series of plans for the future. For example, we are already considering things related to stablecoins.

Techub News: In addition to Bitcoin and Ethereum spot ETFs, Harvest also launched Asia’s first tokenized fund late last year. What other layouts does Harvest have on the virtual track?

Han Tongli: Regarding the layout of the virtual track, as I just said, we will first build the bridge, and then map the assets on both sides of the world to each other. In the future, we may map some assets on the chain to the traditional financial world. The purpose of this plan is two-fold. The first is to help investors increase potential returns and reduce risks, and the second is to help customers with financing needs reduce costs and risks.

Important note: Investment involves risks, and you may even lose your investment principal. Past performance or any forecasts or expectations are not indicative of future performance. Investors should read the details of the offering documents of the Harvest Bitcoin Spot ETF and the Harvest Ethereum Spot ETF (collectively, the “Sub-Funds”), including the risk components, before deciding to invest. Investors should not rely solely on this information when making any investment decisions. Investors should note:

This product: The sub-fund is a passive exchange-traded fund that directly holds Bitcoin and Ethereum respectively.

Risks related to Bitcoin/Ethereum: The Sub-Fund is exposed to the risks of Bitcoin and Ethereum through its direct investments in Bitcoin and Ethereum respectively, and any negative risks to the price of Bitcoin/Ethereum may also affect The value of the sub-fund.

Bitcoin/Ethereum and Bitcoin/Ethereum industry risks: Bitcoin/Ethereum operates without a central authority and is not supported by any government. Bitcoin and Ethereum are relatively new innovations, and their markets are subject to rapid price fluctuations, changes and uncertainty.

Speculative risks: Investing in Bitcoin/Ethereum is highly speculative, and market fluctuations are difficult to predict.

Extreme High Volatility Risk: Investing in Bitcoin/Ethereum may be extremely volatile compared to traditional securities investments, and investments in the Sub-Fund may experience sudden and substantial losses. Investors should be prepared to potentially lose their entire investment in a single day.

Risks of fraud, market manipulation and security failure: Bitcoin/Ethereum may face the risk of fraud, theft, manipulation or security failure, or other operations or problems that affect the operation of the virtual asset trading platform. The occurrence of any of the above circumstances may have a negative impact on the price of Bitcoin/Ethereum and the value of the Sub-Fund’s investments.

Cybersecurity risks: Bitcoin/Ethereum are susceptible to theft, loss and destruction. Bitcoin/Ethereum transactions are generally irreversible without the consent and active participation of the transaction recipient. The Bitcoin/Ethereum network is also vulnerable to various deliberate cybersecurity attacks. Cybersecurity risks to the Bitcoin/Ethereum protocol and institutions that host or facilitate the transfer or trading of Bitcoin/Ethereum may cause the value of Bitcoin/Ethereum to decline.

Regulatory risks: Regulations related to Bitcoin/Ethereum, virtual assets and related products and services continue to evolve. Regulatory changes and actions regarding virtual assets as a whole or any single specific virtual asset may cause changes or even significant negative changes in the nature of Bitcoin/Ethereum investments.

Fork risk: Developers may propose modifications to the Bitcoin/Ethereum network from time to time. If the updated Bitcoin/Ethereum network is incompatible with the original Bitcoin/Ethereum software and a sufficient number (not necessarily a majority) of users and miners choose not to migrate to the updated Bitcoin/Ethereum network, this will It will lead to a “hard fork” of the Bitcoin/Ethereum network, leading to the simultaneous operation of two versions of the Bitcoin/Ethereum network and the splitting of the underlying blockchain of the Bitcoin/Ethereum network. The occurrence of such a “fork” may have a negative impact on the price and liquidity of Bitcoin/Ethereum and the value of the Sub-Fund’s investments.

Virtual asset trading platform risks: Virtual asset trading platforms have in the past and may in the future crash, cease operations, or temporarily or permanently shut down due to fraud, network security issues, manipulation, technical failures, hackers or malware, defects or security vulnerabilities. The potential impact of the absence of a virtual asset trading platform may have a negative impact on the value of Bitcoin/Ethereum and, in turn, the value of the Sub-Fund.

Cybersecurity Risks Related to the Custody of Virtual Assets: The security procedures currently in place in connection with the custody of virtual assets may not protect the Sub-Fund from all errors, software defects or vulnerabilities in the Sub-Fund’s other technical infrastructure, which may result in the Sub-Fund’s Assets are stolen, lost or damaged.

Index Disclaimer: The products and services of CF Benchmarks Ltd are exclusively authorized to Harvest International Asset Management Co., Ltd. (“Harvest International”) as the source of information for some of its products and services. CF Benchmarks Ltd, its licensors and agents have no other connection with Harvest International’s products and services, and do not guarantee, sponsor, endorse or promote Harvest International’s products and services, or their related obligations or responsibilities. CF Benchmarks Ltd, its licensors and agents do not guarantee the accuracy or completeness of the index products licensed to Harvest International, and do not assume any responsibility for the inaccuracies, omissions or interruptions of any index products.

The sub-fund is authorized by the Securities and Futures Commission of Hong Kong. The above recognition does not mean that the sub-fund has been officially recommended by the Hong Kong Securities and Futures Commission.

This information is issued by Harvest International and has not been reviewed by the Securities and Futures Commission of Hong Kong.

This article is reprinted with the authorization of “Exclusive Interview with Harvest International CEO: Just to Defend Hong Kong’s Status as an International Financial Center”. Author: Yangz