- According to asset managers, Hong Kong has approved the launch of spot exchange-traded funds for Bitcoin and Ethereum.
- ChinaAMC, Bosera International, and Harvest Global are among the first issuers to be given the green light to issue ETFs.
Hong Kong Approves First Bitcoin and Ether Spot ETFs
On 17 April 2024, Hong Kong regulators approved the initial launch of spot exchange-traded funds for Bitcoin (BTC) and Ethereum (ETH).
According to a reuters report, they had already approved three local issuers on 15 April. Notably, the move could pave the way for Hong Kong to become Asia’s first to accept cryptos as a mainstream investment pool.
In addition, the other three offshore Chinese asset managers will soon launch their spot Bitcoin and Ether ETFs.
They include the Hong Kong Units of Harvest Fund Management, China Asset Management (ChinaAMC), and Bosera Asset Management.
Interestingly, Bosera will partner with a Hong Kong-based HashKey Capital to launch its spot crypto ETFs.
On the other hand, OSL Digital Securities, a licensed digital asset platform, will serve as the sub-custodian for ChinaAMC and Harvest.
Hong Kong’s security watchdog issues conditional authorization letters for ETF applications if they satisfy its requirements.
The conditions these applications must meet include document filing, fee payments, and HKEX listing approval.
Exchange Traded Funds to Launch as In-Kind ETFs
Interestingly, the regulator approved these spot Bitcoin and Ether ETFs to be launched as in-kind ETFs. This means that new ETF shares can be issued using ETH and BTC.
Notably, the in-kind model allows issuers to create new ETF shares only with cash, which differs from the cash-create redemption model.
Currently, spot Bitcoin ETFs use the cash create model in the U.S.
The in-kind subscription model for the spot BTC and ETH ETFs in Hong Kong represents a substantial innovation. This mechanism enhances market liquidity by allowing the direct exchange of the asset for ETF shares, reducing reliance on cash settlements and facilitating uninterrupted trading flows.
Patrick Pan, OSL board chairman and CEO, stated
Receiving approval confirms that these firms have cleared the most crucial part of the vetting processes. It would bring them closer to the launch.
Pan added that it’s too early to speculate exactly when Bitcoin ETFs would start trading in Hong Kong.
The approvals follow the anticipation that SFC would approve the first batch of spot Bitcoin ETFs.
According to the regulator watchdog, the listing processes will need to be finalized in an estimated 14 days. Other arrangements will be made after SFC approval.
Hong Kong to Become a Crypto Hub in Asia
Crypto trading in Asia has faced challenges when it comes to mainstream adoption. Previously, Mainland China had banned crypto trading after a massive crackdown in the sphere in 2021.
In any case, Hong Kong is slowly becoming a crypto hub, pushing itself to compete with fast-paced regions like Dubai and Singapore.
Interestingly, they quickly set up crypto-focus policies that would assist them in competing with the said family hubs and establishing strong regional relations.
It’s unclear whether Mainland China would reverse its stance and allow Chinese investors to invest in cryptos through ETFs.
The move comes three months after US regulators approved the trading of Bitcoin ETFs, which have since recorded billions of inflows.
Remarkably, Hong Kong’s move makes it the first place in the world to approve an ether ETF. The US SEC has yet to approve such a product, and asset managers don’t expect it to do so.
Will the new ETF approval open Hong Kong as a crypto hub and compete with other fast-paced countries in the region?
Suchet D. Salvesen
Hong Kong Approves First Bitcoin and Ether Spot ETFs Hong Kong and Bitcoin | Source: Shutterstock On 17 April 2024, Hong Kong regulators approved the initial launch of spot exchange-traded funds for Bitcoin (BTC) and Ethereum (ETH). According to a reuters report, they had already approved three local issuers on 15 April. Notably, the move could pave the way for Hong Kong to become Asia's first to accept cryptos as a mainstream investment pool. In addition, the other three offshore...
