Hong Kong to launch Asia’s first spot Bitcoin ETFs next week

abdelaziz Fathi

Hong Kong is set to become Asia’s first city to introduce spot Bitcoin exchange-traded funds (ETFs), with the first approvals expected to be announced next week.

This milestone outpaces industry expectations, which expected such launches later in the year. The move was facilitated by regulators hastening the approval process to position the city as a pioneer in the region for embracing financial trading instruments linked directly to Bitcoin.

The initiative follows the launch of the first U.S.-listed ETFs tracking spot Bitcoin in January, which garnered $12 billion in net inflows. Bitcoin’s valuation has surged by over 60% this year, hitting an all-time high of $73,803 in March.

Applications for launching the ETFs have been submitted by at least four asset managers from mainland China and Hong Kong, including the Hong Kong units of China Asset Management, Harvest Fund Management, and Bosera Asset Management. While these applications are under review, the Securities and Futures Commission (SFC) and the involved companies have refrained from commenting on the matter.

The Hong Kong divisions of China Asset Management and Harvest Fund Management recently received approval to manage portfolios with over 10% investment in virtual assets. Despite the ban on cryptocurrency trading in mainland China, offshore Chinese financial institutions have actively sought to partake in Hong Kong’s burgeoning crypto asset landscape.

Hong Kong’s venture into cryptocurrency ETFs began with the approval of ETFs for cryptocurrency futures in late 2022. The CSOP Bitcoin Futures ETF managed to grow its assets under management sevenfold since September to about $120 million. Additionally, Hong Kong-based Value Partners said it plans to launch a spot Bitcoin ETF to integrate cryptocurrency into its financial services offerings.

Elsewhere, Hong Kong has officially ceased accepting license applications from cryptocurrency exchanges, signaling a stringent regulatory shift for trading venues. The Securities and Futures Commission (SFC) announced that all crypto trading platforms operating without having applied for a license must conclude their operations in the region by May 31, 2024.

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