Apr 18, 2024

Hong Kong Plans to Approve Spot Bitcoin and Ethereum ETFs By April 15th

  • The special administrative region of China, Hong Kong, is reportedly set to approve spot Bitcoin and Ethereum ETFs on April 15th. This is after granting issuers clearance to provide virtual-asset-related fund management services on April 9.
  • Retail and institutional investors would simultaneously benefit if these ETFs are approved.

In recent years, Hong Kong has been actively trying to become a hub for the trading of digital assets, and it is getting closer to its goal. Since setting a regulatory regime for virtual asset service providers in June 2023, Hong Kong recently hit a new milestone with the expected approval of Ethereum and Bitcoin spot ETFs.

Hong Kong Gives the Green Light for Spot Bitcoin and Ethereum ETFs

The Securities Regulatory Commission of Hong Kong (SFC) has decided to approve spot Bitcoin and Ethereum ETFs. According to local news outlet Tencent News, the Hong Kong regulator had initially planned only four spot Bitcoin ETFs. However, a new report by Bloomberg indicates that SFC is accelerating its progress, as the exchange-traded funds could be approved as early as April 15th.

According to sources who are very familiar with the recent developments, the lead issuers for these ETFs are Chinese asset manager Harvest Fund Management Co. and a partnership between Bosera Asset Management (International) Co. and HashKey Capital. The list of events that are expected to happen is the approval by the SFC and the completion of listing details with Hong Kong Exchanges & Clearing Ltd. (HKEX). Immediately after this, those approved as the issuers can now launch their respective ETFs at the end of April.

Previously, on April 9th, the SFC granted Harvest and China Asset Management clearance to provide virtual-asset-related fund management services. On the same day, Julia Leung, CEO of the SFC, expressed the need for the responsible use of innovative technologies like distributed ledger technology. While speaking at the HSBC Global Investment Summit., Leung said technologies like this can be deployed positively to improve efficiency in the financial sector.

“We support the responsible use of innovative technologies such as distributed ledger technology to drive efficiency gains for the financial industry and foster a Web3 ecosystem in Hong Kong provided that investor protection is safeguarded. We encourage tokenization, viewing it as a technology wrapper around conventional securities and investment products,” Leung said.

Retail and Institutional Investors Set to Benefit

The approval of these exchange-traded funds in Hong Kong will contribute to the advancement of crypto adoption in the region. Indeed, some retail investors are not yet into crypto because they need to handle crypto wallets and other blockchain technologies. However, the introduction of spot Bitcoin and Ethereum ETFs provides them an opportunity to trade these cryptocurrencies in real-time.

Institutional investors are also set to benefit from the recent approval of exchange-traded funds in the administrative region of Hong Kong. These institutions will avoid the risks and complexities that come with cryptocurrencies’ self-custody. Moreover, this presents an opportunity for portfolio diversification and as a hedge against traditional market volatility.

The approval of spot Bitcoin and Ethereum ETFs in Hong Kong comes three months after the US Securities and Exchange Commission approved 11 spot Bitcoin applications. Subsequently, Hong Kong is expected to enjoy the same success as its US counterparts.

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