Hong Kong Advances with Bitcoin and Ethereum ETFs

Hong Kong’s Securities and Futures Commission (SFC) has granted conditional approval to several spot Bitcoin and Ethereum ETF applications. This move signals a growing institutional acceptance of digital assets within the region.

China Asset Management and Harvest Global Investments initially announced these approvals. However, Harvest retracted its statement shortly afterwards, likely awaiting a formal announcement from the regulatory body. In the meantime, OSL, a digital asset platform, confirmed its role as the sub-custodian partner for both firms’ ETFs, underscoring its pivotal position in this new venture.

Furthermore, Bosera Asset Management has also received conditional approval for its ETF, which it plans to manage in collaboration with HashKey Capital. This approval spree follows the trend set by the U.S. Securities and Exchange Commission (SEC), which earlier this year green-lit multiple spot Bitcoin ETFs, leading to significant capital inflows since their January launch.

Despite the progressive stance on Bitcoin ETFs, the U.S. SEC has been more cautious regarding Ethereum-based ETFs, with multiple applications still pending. Adding to the uncertainty, the Ethereum Foundation disclosed an ongoing investigation by a state authority, hinting at possible regulatory hurdles that might impact the approval process for an Ethereum ETF in the U.S.

In contrast, Hong Kong has been progressively fostering a supportive environment for cryptocurrency. Unlike mainland China, which continues its stringent crackdown on the sector, Hong Kong introduced a Virtual Asset Trading Platform (VATP) licensing regime in June 2023. This strategic move is part of the city’s broader ambition to establish itself as a leading crypto hub.

By August 2023, HashKey and OSL had become the first licensed crypto exchanges authorized to serve retail investors in Hong Kong, marking a milestone in the city’s crypto landscape.

OSL CEO Patrick Pan emphasized the significance of their role, stating, “Our appointment as sub-custodian to China Asset Management demonstrates our commitment to advancing digital asset investments in Hong Kong, mirroring reputable partnerships similar to those in the U.S. market.”

Hong Kong’s proactive approach to approving Bitcoin and Ethereum ETFs exemplifies its commitment to integrating digital assets into its financial ecosystem. This not only contrasts with the restrictive measures seen on the Chinese mainland but also positions Hong Kong as a burgeoning global leader in the cryptocurrency space, ready to capitalize on the evolving digital asset landscape.