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Spot bitcoin exchange-traded funds could be launched in Hong Kong this month with the first approvals likely to be announced next week, two people familiar with the matter said.

That timeline would make Hong Kong Asia’s first city to offer the popular ETFs and is much faster than industry expectations of launches sometime this year.

Regulators have sped up the approval process, according to one of the people.

Having lost much of its shine as a global financial hub due to restrictions during the pandemic, China’s faltering economy and Sino-US tensions, Hong Kong authorities have been keen to do what they can to improve the city’s attractiveness for financial trading.

“The significance of Hong Kong ETFs is far-reaching as it could bring in fresh global investment as well as pushing crypto adoption to a new height,” said Adrian Wang, CEO of Metalpha, a Hong Kong-based crypto wealth manager.

The US launched the first US-listed exchange-traded funds (ETFs) to track spot bitcoin in January, drawing roughly $12 billion (roughly Rs. 99,987 crore) in net inflows, data from BitMEX Research shows.

Bitcoin has gained more than 60 percent this year and hit an all-time high of $73,803 (roughly Rs. 61.5 lakh) in March. It was trading at around $69,000 (roughly Rs. 57.5 lakh) on Wednesday.

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

The Hong Kong units of China Asset Management, Harvest Fund Management and Bosera Asset Management are among the applicants, according to the two people and a third source.

The sources were not authorised to speak to media and declined to be identified.

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

China Asset Management and Harvest Fund Management’s Hong Kong units obtained approval this month to manage portfolios that invest more than 10 percent in virtual assets, according to the SFC’s website.

Their parent companies are among the biggest mutual fund firms in China, with each managing over CNY 1 trillion ($138 billion or roughly 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 ETFs for cryptocurrency futures in late 2022. The largest one – the CSOP Bitcoin Futures ETF – has seen its assets under management swell seven times since September to around $120 million (roughly Rs. 999 crore).

Hong Kong-based Value Partners has also said it is exploring launching a spot bitcoin ETF. It has not disclosed if it has submitted an application.

© Thomson Reuters 2024


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