Hong Kong is close to approving its first bitcoin (btc) and ethereum (eth) exchange-traded funds (ETFs) with final approvals possible as early as Monday, according to bitcoin-ether-etf-approval-expected-as-soon-as-monday” target=”_blank” rel=”noopener nofollow”>Bloomberg, citing two people familiar with the matter. This move positions Hong Kong as a key player in the Asian cryptocurrency market and underlines its ambition to become a leading digital asset hub.
Approval for bitcoin and eth spot ETFs on Monday?
Hong Kong's Securities and Futures Commission (SFC) is reportedly finalizing the approval process, and Harvest Global Investments and a partnership between Bosera Asset Management (International) Co. and HashKey Capital are set to receive the first set of approvals. These approvals are dependent on the completion of the necessary listing agreements with Hong Kong Exchanges & Clearing Ltd. (HKEX), with the aim of launching the product by the end of April.
Unlike the futures-based crypto ETFs currently available in Hong Kong, these spot crypto ETFs will allow direct investment in the actual cryptocurrencies, bitcoin and Ether. This method could offer a more tangible asset base for investors, in contrast to derivatives-based investments. The introduction of similar ETFs in the United States on January 11 of this year has been linked to increased market activity and significant capital inflows into the sector.
Notably, the upcoming Hong Kong ETFs will use an “in-kind origination model,” as Bitcoinist previously reported. This model facilitates the actual exchange of cryptocurrencies in the creation and redemption processes, which could reduce costs and improve liquidity, a notable advance over traditional ETF structures and their US peers.
Additionally, the launch of these ETFs is strategically timed as the global crypto community anticipates the upcoming bitcoin Halving event in just eight days, which historically influenced market dynamics. This strategic launch could attract substantial new investments not only from Hong Kongers but also from the broader Chinese and Asian market.
This development follows a series of regulatory developments in Hong Kong, including the implementation of a regulatory regime for virtual asset service providers and the approval of virtual asset management funds. The introduction of these spot ETFs is seen as a continuation of these efforts to foster a regulated and stable environment for digital assets, enhancing investor protection and integrating digital assets more closely with traditional financial sectors.
According to Singapore-based Matrixport, the investment vehicle could unlock up to $25 billion in demand from Chinese investors through the Southbound Stock Connect program.
At the time of publication, btc price did not show any major reaction to the news and was trading at $70,656.
Featured image created with DALL·E, chart from TradingView.com
