Hong Kong greenlights first batch of spot Bitcoin, Ether ETFs

Category: Asia Crypto Regulatory

Hong Kong has approved several spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) applications, reinforcing its ambition to establish itself as a prominent regional crypto hub. The move signifies a proactive stance towards embracing cryptocurrency-related financial products.  

China Asset Management’s Hong Kong unit, along with Harvest Global Investments, has secured approval from the Hong Kong Securities and Futures Commission (SFC) to launch spot crypto ETFs. These ETFs will be issued in collaboration with industry partners such as OSL, BOCI International, Bosera Asset Management, and HashKey Capital, underscoring the collaborative approach within the crypto ecosystem.  

Expanded investment opportunities

The introduction of spot bitcoin and ether ETFs offers investors new avenues for asset allocation, reinforcing Hong Kong‘s position as an international financial centre. This expansion of investment options aligns with the region’s commitment to fostering innovation and attracting capital in the burgeoning crypto space.  

Regulatory framework

In contrast to mainland China’s stringent approach to cryptocurrency trading and mining, Hong Kong has adopted a more welcoming stance towards crypto firms. The establishment of a crypto licensing regime for trading platforms in 2023 reflects the region’s commitment to providing a conducive environment for crypto-related businesses.  

Implications of crypto ETFs in the region

In a statement sent to AIBC News, Justin d’Anethan, Head of Business Development for APAC of Keyrock, said the approval of both BTC and ETH spot ETFs is momentous not only for the region but also for crypto.  

 “The implications of spot ETFs beyond the existing ones in the U.S. and in some other jurisdictions furthers the access to digital assets to an ever-growing base of investors. It’s worth noting that many industry experts believe the HK products will accept in-kind subscription and redemption, so that investors can enter and exit the ETF with native tokens (BTC and ETH respectively), making the process essentially cheaper both from a transfer perspective, as well as on an FX basis and, for some, for fiscal reasons,” d’Anethan elaborated.  

Hong Kong as financial hub in Asia

“Another point that stands out, of course, is that it’s not just Bitcoin but Ether as well. Presumably, regulators here wanted to take a step further, ahead of their U.S. counterparts, giving access to the second largest market cap cryptocurrency,” d’Anethan said. “It will be fascinating to see how it’s received, how exactly it will be structured and perceived by investors in relation to the staking possibilities — which essentially provides a yield for native ETH holders who’d choose to stake their coins.”  

“Lastly, it solidifies Hong Kong as a financial hub in Asia, allowing many Chinese investors along with allocators that might not have access or a desire to engage with the U.S.-traded products,” he concluded.