Hong Kong regulators are reportedly seeking to approve spot bitcoin ETFs very soon. Could the city boost its financial hub status via a crypto boom?
As of late, there has been increasing momentum about news related to the green-lighting of spot Bitcoin exchange-traded funds (ETF) in Hong Kong. According to a «Reuters» report citing unnamed sources, local regulators have sped up the process with the first approvals likely to be announced next week.
The move has the potential to drive a crypto boom in the city as traditional financial institutions and investors seek more conventional structures to tap the rallying asset class with Bitcoin up around 60 percent year-to-date to over $70,000.
Chinese Applicants
Various Chinese asset managers have emerged as possible frontrunners to launch spot Bitcoin ETFs. Hong Kong-based Value Partners announced plans in January to explore the launch of its own Bitcoin ETF via a partnership with Venture Smart Financial Holdings while Shenzhen-based Bosera Asset Management and HashKey Capital unveiled a tie-up involving virtual asset spot ETFs earlier this month.
China Asset Management and Harvest Fund Management, which obtained regulatory approval this month to manage portfolios that invest more than 10 percent in virtual assets, were also named as ETF applicants in the «Reuters» report.
Banking Support
Major banks are also prepared to support the distribution of crypto ETFs in Hong Kong. HSBC became the first bank in the city to add crypto ETFs to its offering in June 2023 followed by UBS in November. Both lenders have allowed client access to Bitcoin and Ether-related ETFs.
There are already crypto-related products available on the Hong Kong bourse, such as the CSOP Bitcoin Futures ETF and the Samsung Bitcoin Futures Active ETF.
Digital Asset Hub
The upcoming spot ETFs will mark another step in Hong Kong’s ambitions to become a crypto hub after its virtual asset licensing regime went live in June 2023. The move will also place the city in competition against the US, which saw the authorization of the first 11 spot Bitcoin ETFs in January.
«The adoption of traditional structures to build crypto exposure is a very important step for the asset class to enter the mainstream,» said Gerald Goh, co-founder of digital asset banking group Sygnum, in a previous interview with finews.asia. «While the majority of crypto investors have been buying and selling directly, the bulk of fund flows traditionally goes through funds rather than direct investment.»
