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Hong Kong First Spot Bitcoin ETF Approved: Can we Expect Chinese Billions to Roll in?

Last Updated April 15, 2024 9:12 AM
Teuta Franjkovic
Last Updated April 15, 2024 9:12 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Hong Kong approves Bitcoin and Ethereum spot ETFs, becoming the first major market to offer those products.
  • Major Hong Kong firms approved for Bitcoin & Ethereum ETFs, with Harvest Global up for more.
  • China’s crypto ban prevents mainland investors from accessing these Hong Kong ETFs due to regulatory limitations.

The Hong Kong Securities and Futures Commission (SFC) has approved  the trading of spot Bitcoin and Ethereum ETFs.

This decision positions Hong Kong as the first jurisdiction to launch a spot Ethereum ETF. Meanwhile, the US Securities and Exchange Commission (SEC) is still considering similar approvals.

BTC and ETH Spot ETFs Approved in Hong Kong by Tops 

The SFC has granted approvals  to several leading financial companies, including China Asset Management, Bosera Capital, and HashKey Capital Limited, to launch Bitcoin and Ethereum spot exchange-traded funds (ETFs). These ETFs allow investors to directly purchase shares using Bitcoin and Ethereum, as noted by local news sources.

Furthermore, Harvest Global Investments has received preliminary approval from the Commission to create additional Bitcoin and Ethereum digital asset spot ETFs. This move indicates a growing expansion in the digital asset investment field. Han Tongli, CEO and CIO of Harvest International, commented  on the approvals.

Tongli said :

“This time Harvest’s investment in two major digital asset spot ETF products has been approved in principle, which not only highlights Hong Kong’s competitive advantages in the field of digital assets, but also demonstrates Harvest International’s drive to promote industry innovation and satisfaction. This is a reflection of our continued leadership and innovation in the field of blockchain assets and AI investment.”

Mainline China Ban Limits Access to Hong Kong Crypto ETFs

Mainland China’s ban on cryptocurrencies means access to Bitcoin and Ethereum ETFs in Hong Kong is highly unlikely. Issuers in Hong Kong have confirmed that regulatory barriers prevent mainland Chinese funds from investing in these cryptocurrency-related ETFs.

Hong Kong ETFs Block Crypto Access for Mainland Investors

Recent communications from ETF issuaries in Hong Kong have clarified misunderstandings about the investment options available to Chinese investors through the Southbound Stock Connect program.

This program is designed to facilitate cross-border investments between mainland China and Hong Kong. However, it explicitly excludes digital currency products due to China’s stringent stance on cryptocurrency risks.

Hong Kong’s HKMA Encourages Banks to Support Digital Currency Initiatives

Since July last year, the Hong Kong Monetary Authority (HKMA) has been actively promoting the development of digital currencies as a mainstream medium of exchange. Therefore, Hong Kong’s banking regulator has been encouraging local financial institutions to explore ways to serve the unique needs of crypto exchanges. This includes regular meetings aimed at accommodating the demands of such clients.

Key banks like HSBC and Standard Chartered have been integral to developing the infrastructure that enables licensed crypto regulators to easily access banking services in Hong Kong.

Additionally, crypto companies such as OKX, Bybit, and Huobi, founded by entrepreneurs of Chinese descent, have expressed their intentions to apply for the new licensing opportunities.

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