Hong Kong Launches First Bitcoin & Ether ETFs to Dominate Crypto

Hong Kong Launches First Bitcoin & Ether ETFs to Dominate Crypto

On Monday, Hong Kong granted approval to a number of applications for spot bitcoin and ether exchange-traded funds (ETFs), further cementing its ambition to become a key regional center for cryptocurrency.

China Asset Management, a prominent Chinese asset management firm, announced that its Hong Kong division has obtained authorization from the Hong Kong Securities and Futures Commission to provide retail asset management services pertaining to spot cryptocurrency ETFs. The firm is preparing to launch spot bitcoin and ether ETFs in partnership with OSL and BOCI International. OSL has stated its role as the inaugural virtual asset trading and sub-custodian partner for China Asset Management in relation to these forthcoming ETFs.

In addition, Harvest Global Investments has received in-principle approval from the SFC for its two spot crypto ETFs, according to the company's announcement. The firm noted that these ETFs, which are set to be launched in collaboration with OSL, are designed to tackle problems such as high margin requirements. OSL commented on the collaboration, highlighting its well-established infrastructure which will provide a secure trading setting that is crucial for the ETFs’ operations, ensuring the precise and reliable management of the underlying assets.

Bosera Asset Management, also a Hong Kong-based subsidiary of a major Chinese asset manager, along with HashKey Capital, informed  that they have received conditional approval from the regulatory body to manage two spot crypto ETFs jointly. The specifics of what the “conditional approval” entails were not immediately explained by the duo.

Bosera and HashKey also shared plans to initiate the Bosera HashKey Bitcoin ETF and the Bosera HashKey Ether ETF. These ETFs aim to offer investors the ability to directly subscribe for shares using bitcoin and ether. However, they have not yet released a timeline for these launches.

“The introduction of the Virtual Asset Spot ETFs not only provides investors with new asset allocation opportunities but also reinforces Hong Kong's status as an international financial center and a hub for virtual assets,” Bosera said in a statement.

In contrast to the extensive restrictions on cryptocurrency trading and mining on the Chinese mainland, Hong Kong has recently taken a more welcoming approach towards crypto businesses. In June 2023, the region officially commenced a crypto licensing regime, allowing licensed exchanges to offer retail trading services. Licenses have been awarded to two platforms thus far—HashKey and OSL.

Adrian Wang, CEO of Metalpha, an Asia-based digital asset management firm, told that the upcoming spot ether ETFs are likely to see substantial interest.

“I think ETF could be more influential and important compared to that of bitcoin, as investors have options to gain bitcoin exposure with bitcoin-related stocks like mining companies, but there are no ETH-related stocks as of now,” said Wang.

Angela Ang, a former regulator at the Monetary Authority of Singapore and now a senior policy advisor at blockchain intelligence firm TRM Labs, added, “The approval of the spot Ether ETFs by Hong Kong, which precedes a similar decision in the US, marks a significant milestone in Hong Kong's progression towards becoming a leading cryptocurrency hub. Given the limited alternatives for Ethereum exposure, these Ether ETFs might attract considerable investor interest.”