Hong Kong may approve first spot Bitcoin ETF in April

A spot bitcoin exchange-traded fund could launch in Hong Kong this month, with first approvals likely to be announced next week, two people familiar with the matter said.

The timetable would make Hong Kong the first city in Asia to offer the popular ETF and would come much sooner than industry expectations for a launch sometime this year.

Regulators expedited the approval process, a person familiar with the matter said.

Hong Kong has lost much of its luster as a global financial center due to pandemic restrictions, China’s faltering economy and tensions between China and the United States, but authorities have been keen to do whatever they can to make the city more attractive for financial transactions.

Adrian Wang, CEO of Hong Kong-based crypto wealth management company Metalpha, said: “The importance of Hong Kong ETFs is profound as it can bring new global investment and push cryptocurrency adoption to new heights.”

The United States launched the first U.S.-listed exchange-traded fund (ETF) tracking Bitcoin spot in January, attracting net inflows of about $12 billion (roughly Rs. 99,987 crore), according to data from BitMEX Research.

Bitcoin is up more than 60% this year and hit an all-time high of $73,803 (roughly Rs. 6.15 crore) in March. It was trading at about $69,000 (approximately Rs. 5.75 crore) on Wednesday.

At least four mainland China and Hong Kong asset managers have submitted applications to launch ETFs, two sources said.

The Hong Kong subsidiaries of China Asset Management, Harvest Fund Management and Boshi Fund Management are among the applicants, according to two people familiar with the matter and a third source.

The sources were not authorized to speak to the media and declined to be named.

Hong Kong’s Securities and Futures Commission (SFC) and the three Chinese companies declined to comment.

The Hong Kong subsidiaries of China Asset Management Co. and Harvest Fund Management Co. were approved this month to manage portfolios investing more than 10% in virtual assets, according to the China Securities Regulatory Commission website.

Their parent company is one of China’s largest mutual fund companies, each managing more than 1 trillion yuan ($138 billion, approximately Rs 11,49,963 crore) in assets.

Although cryptocurrency trading is banned in mainland China, offshore Chinese financial institutions have been keen to participate in crypto asset development in Hong Kong.

Hong Kong approved its first cryptocurrency futures ETF in late 2022. The largest of them – the CSOP Bitcoin Futures ETF – has swelled seven-fold in assets under management since September to about $120 million (roughly Rs. 999 crore).

Hong Kong-based Value Partners Group also said it is exploring the launch of a spot Bitcoin ETF. It did not disclose whether an application had been submitted.

© Thomson Reuters 2024