Through their Hong Kong branches, numerous leading Chinese equity funds have filed applications to launch spot Bitcoin exchange-traded funds (ETFs). That move comes aligned with the ongoing surge in cryptocurrency prices and Hong Kong’s intensified push to become an international fintech center.
A representative from Harvest Fund Management, a Chinese investment firm, mentioned that their Hong Kong subsidiary has lodged an application with the Hong Kong Securities and Futures Commission (SFC) for a spot Bitcoin ETF, which is now awaiting the SFC’s decision.
Web 3.0 Initiatives Will Be Further Developed In Hong Kong
Previously, in December 2022, the Hong Kong arm of Harvest Fund Management pioneered the introduction of futures crypto ETFs in Asia, with the SFC greenlighting the public issuance of these virtual asset futures ETFs on October 31, 2022.
It is reported that additional Chinese equity funds are considering submitting applications for spot Bitcoin ETFs, evaluating the feasibility and potential of such ventures.
Furthermore, a collaborative effort between HashKey Exchange and the Hong Kong division of China Asset Management has been formed to jointly foster and promote Web 3.0 initiatives within the asset management sector in Hong Kong.
The SFC and the Hong Kong Monetary Authority disclosed in December that they would be evaluating applications for spot Bitcoin ETFs.
A Bitcoin Futures ETF Has Seen A Five-Fold Increase In AUM Over The Last Five Months
Bitcoin’s current price stands around $72,000, with anticipations of sustained robust ETF inflows as the cryptocurrency approaches its upcoming halving this month, nearly doubling its value since last December.
In March, Bitcoin’s value momentarily surged to a record peak of over $72,500. The CSOP Bitcoin Futures ETF, Hong Kong’s largest Bitcoin futures ETF, witnessed a fivefold asset under management increase in the past five months, surpassing $100 million, as reported by Reuters.
During his address at the “2024 Hong Kong Web3 Carnival” inauguration, Edmond Huang, Hong Kong’s Deputy Secretary for Financial Services and the Treasury Bureau, highlighted continuous regulatory efforts on over-the-counter (OTC) virtual asset trading to bolster Hong Kong’s status as a leading crypto hub.
Huang also noted the city’s plan to authorize intermediary firms to offer a diverse array of virtual asset services, including trading in futures and ETFs.
Hong Kong Provides A Legal Loophole For Chinese Companies
Harvest Fund is responsible for managing assets totaling over $230 billion, and Southern Fund has control of more than $280 billion. The potential endorsement of Bitcoin ETFs by such giant entities would greatly affirm Bitcoin’s credibility among Chinese investors and regulatory bodies.
This development reflects the changing attitude towards Bitcoin in China. Despite the country’s previous stringent measures against Bitcoin activities, there’s a noticeable shift in stance. Although the mainland maintains conservative, Hong Kong presents a more welcoming environment, drawing interest from Chinese investment funds.
Looks like Hong Kong is going to allow in-kind creations and redemptions for spot bitcoin ETFs in 2Q (unlike US which is cash creations only), which could help spark aum and volume in the fast-growing region via new note today from @Rebeccasin_SK https://t.co/IxcdWEFDvC pic.twitter.com/sDsS4nbzGi
— Eric Balchunas (@EricBalchunas) March 26, 2024
Through subsidiaries based in Hong Kong, leading investment funds have the opportunity to engage with Bitcoin while adhering to regulatory standards.
The launch of Hong Kong’s inaugural Bitcoin ETFs is expected possibly by the second quarter of this year.
