Hong Kong is set to approve its first Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) with potential final approvals as early as Monday, according to Bloomberg, citing two people familiar with the matter. The move positions Hong Kong as a central player in the Asian cryptocurrency market and underlines its ambition to become a leading digital asset platform.
Approval of Spot Bitcoin and ETH ETFs on Monday?
Hong Kong’s Securities and Futures Commission (SFC) is reportedly finalizing the approval process, with Harvest Global Investments and a partnership between Bosera Asset Management (International) Co. and HashKey Capital set to receive the first round of approvals. These approvals are conditional on entering into the necessary listing agreements with Hong Kong Exchanges & Clearing Ltd. (HKEX), with a view to a product launch by the end of April.
Unlike the futures-based crypto ETFs currently available in Hong Kong, these spot crypto ETFs will allow direct investment in real cryptocurrencies, Bitcoin and Ether. This method could provide investors with a more tangible asset base, unlike derivatives-based investments. THE introduction The appearance of similar ETFs in the United States on January 11 this year is linked to increased market activity and large capital inflows into the sector.
Notably, upcoming Hong Kong ETFs will use an “in-kind creation model,” as reported earlier by Bitcoinist. This model facilitates the actual exchange of cryptocurrencies in the creation and redemption processes, which could reduce costs and improve liquidity – a notable advance over traditional ETF structures and their US counterparts.
Additionally, the rollout of these ETFs is strategically timed as the global cryptocurrency community anticipates the next Bitcoin halved event in just eight days, which has historically influenced market dynamics. This strategic launch could attract substantial new investment not only from Hong Kongers but also from the wider Chinese and Asian market.
This development follows a series of regulatory developments in Hong Kong, including the implementation of a regulatory regime for virtual asset service providers and approval of virtual asset management funds. The introduction of these spot ETFs is seen as a continuation of these efforts to foster a regulated and stable environment for digital assets, strengthen investor protection, and more closely integrate digital assets with traditional financial sectors.
According to Singapore-based Matrixport, the investment vehicle could unlock up to $25 billion in demand from Chinese investors through the Southbound Stock Connect program.
At press time, BTC price showed no major reaction to the news and was trading at $70,656.
Featured image created with DALL·E, chart from TradingView.com
