Hong Kong approves Bitcoin and Ether ETFs and spurs hope more is coming

Hong Kong approves Bitcoin and Ether ETFs and spurs hope more is coming
MarketsRegulation
Hong Kong is the first Asian jurisdiction to embrace spot price Bitcoin and Ether ETFs. Credit: Darren Joseph
  • Hong Kong's Securities and Futures Commission fast-tracked ETFs for the top two cryptocurrencies.
  • China Asset Management said it will be an issuer.
  • Move could open route for mainland Chinese to invest in crypto.

Hong Kong just did the US one better.

The city’s markets regulators Monday not only cleared the way for a spot price Bitcoin exchange traded fund, but also one for Ether, the Ethereum-based token.

OSL Digital Securities, a Hong Kong-based crypto platform, confirmed Monday that the Securities and Futures Commission had approved two providers for which it serves as sub-custodian partner, China Asset Management and Harvest Global.

China Asset Management also confirmed the approval via a WeChat post.

Bosera Capital, in a partnership with HashKey Capital, also received approval for their ETF products.

“I think the approval of the ETFs really serves as a milestone for Hong Kong,” said Kal Chan, Hong Kong CEO at Zodia Custody.

Fast-tracking

Bitcoin jumped 3% and Ether 5% in early morning trading UK time, according to CoinGecko.

Hong Kong’s fast-tracking of the ETF approvals contrasts with the cautious approach taken by other jurisdictions in Asia.

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The Monetary Authority of Singapore recently banned US Bitcoin ETFs for retail investors, and Taiwan continues to debate the regulatory framework for such products.

The SFC’s approval is in principle, meaning regulators have yet to hammer out the details of issuance. No date has been given for when the ETFs would go live.

In 2022, Hong Kong officials green-lit ETFs for Bitcoin futures contracts, which are derivatives typically traded by professional investors.

The action Monday makes Hong Kong an early mover globally on the rollout of a spot price ETFs for top cryptocurrencies.

US regulators reluctantly approved spot Bitcoin ETFs on January 10 and BlackRock, Fidelity, and Ark Invest and other Wall Street asset management companies immediately offered up the products for investors.

Cheap to buy and easy to trade, ETFs have supercharged the crypto market. Investors have ploughed almost $18 billion into BlackRock’s Bitcoin offering.

The US Securities and Exchange Commission is now evaluating applications for Ether ETFs. But given Chair Gary Gensler’s crypto crackdown, investors are increasingly pessimistic the commission will approve them.

Mainland Chinese investors

The opening in Hong Kong will potentially provide a lawful way for mainland Chinese investors to trade Bitcoin and Ether after Beijing banned speculative trading in virtual assets in 2021.

The SFC said it would accept applications for spot Bitcoin ETFs in December last year.

The news has sparked considerable enthusiasm within the crypto community in Hong Kong.

‘As a leading financial centre and gateway for Chinese investment, Hong Kong’s embrace of crypto could unlock billions.’

—  Alessio Quaglini, Hex Trust

Chan told DL News that the approval spot ETFs were a “proof of concept” move that could pave the way for more crypto products that are not available in the US and other jurisdictions.

Alessio Quaglini, Hex Trust CEO and co-founder, told DL News that the approval positioned Hong Kong as a frontrunner in the digital asset race.

“As a leading financial centre and gateway for Chinese investment, Hong Kong’s embrace of crypto could unlock billions in potential demand,” he said.

“China’s recent interest in alternative assets, like gold, suggests a potential appetite for Bitcoin exposure.”

Callan Quinn is DL News’ Hong Kong-based Asia Correspondent. Get in touch at callan@dlnews.com. Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.

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