Hong Kong has conditionally approved the region’s first bitcoin and ether exchange traded funds (ETFs). This decision places Hong Kong at the forefront of integrating cryptocurrencies such as bitcoin and ether into mainstream investment channels. Announced on Monday, these approvals position Hong Kong as the first Asian city to formally recognize these digital currencies as standard financial instruments.
Set to Roll Out: Crypto ETFs by Chinese Asset Managers
Three major Chinese asset managers poised offshore are preparing to introduce these virtual asset spot ETFs shortly. Harvest Fund Management and Bosera Asset Management, operating through their Hong Kong divisions, have confirmed receiving the green light from the Hong Kong Securities and Futures Commission (SFC). Furthermore, China Asset Management’s Hong Kong arm, ChinaAMC (HK), also received approval to manage virtual assets and is in the process of developing its own bitcoin and ether spot ETFs.
The SFC issues conditional approvals when an ETF application meets essential requirements such as fee payments, documentation submission, and securing listing approval from the Hong Kong Stock Exchange (HKEX). However, the regulator has not divulged detailed information regarding the virtual asset spot ETFs.
Cryptocurrency: A Boost for Hong Kong’s Financial Hub Status
Following the U.S. debut of its first spot bitcoin ETFs, which saw around $12 billion in net inflows within a few months, Hong Kong is distinguishing itself by promoting its status as a global hub for digital assets. This strategic move is part of a larger effort to enhance the city’s attractiveness as a significant financial center.
Bosera Asset Management (International) notes that the introduction of virtual asset spot ETFs not only offers new asset allocation opportunities for investors but also strengthens Hong Kong’s position as a key international financial and virtual asset hub. They will partner with Hong Kong-based HashKey Capital to launch their product.
A notable innovation in Hong Kong’s virtual asset spot ETFs is the “in-kind” subscription mechanism, allowing investors to directly purchase ETF shares using bitcoin or ether. This feature reflects a strategic pivot to crypto asset development as a response to recent struggles in Chinese equity markets and aims to diversify the financial landscape in Hong Kong.