The primary focus continues to be on spot Bitcoin ETFs and Hong Kong players do not want to be left behind.
Harvest Fund Management’s Hong Kong branch is the latest entity to apply for a spot Bitcoin exchange-traded fund (ETF) with local regulators. This move aligns with Hong Kong’s preparations for its first wave of spot crypto ETFs.
First Spot Bitcoin ETF in Hong Kong
According to the Tencent report, Harvest aims to launch the city’s first spot Bitcoin ETF after the Lunar New Year holiday on February 10. Following the approval of several funds in the United States, Hong Kong regulators signaled their readiness to consider similar applications.
These ETFs are anticipated to offer a regulated avenue for digital asset investment, promising benefits such as fostering orderly markets for the asset class while simultaneously bolstering investor protection, and bridging digital asset platforms with traditional financial institutions.
However, challenges surface in the form of fee structures and regulatory adherence. Given the limited number of licensed crypto exchanges in Hong Kong, there’s pressure to maintain reasonable fees.
The regulators have detailed rigorous criteria for applicants, which encompass strict custodial regulations. They stipulate that ETF transactions must occur via an SFC-licensed crypto platform or authorized financial institutions adhering to HKMA’s regulatory standards.
Hong Kong Asset Managers Dive into Spot Crypto ETFs
Amidst Hong Kong’s rising importance as a crypto hub, Venture Smart Financial Holdings Ltd., a financial services company of the city-state announced plans to submit an application with the SFC to start the ETF. Brian Chan, group head of investment and product at the company, stated,
“It’s a market that has huge potential. Our goal is $500 million in assets under management by the end of this year.”
In an interview with Caixin earlier this year, Livio Weng, the chief operating officer of HashKey, a licensed crypto exchange in Hong Kong, revealed that approximately ten fund companies in the city are exploring the possibility of launching spot crypto ETFs.
Weng noted that these fund managers, including those backed by Chinese capital as well as others from Asia and Europe, are considering introducing spot crypto ETFs in Hong Kong.
Around seven or eight of these companies have already initiated discussions with Hong Kong’s SFC and have assembled teams to design these investment products.
HashKey, which obtained a license from the SFC to offer retail crypto trading services, also confirmed plans to consider participation in such funds in Hong Kong.