Hong Kong, showing a more flexible attitude towards the industry, is allowing a number of firms to launch spot Bitcoin ETFs in the coming months.
According to news reports dated January 22, preparations for Hong Kong to launch its first spot crypto exchange-traded funds (ETFs) by mid-2024 could reshape the structure of digital asset investments in the region.
With Hong Kong softening its approach to the industry and creating regulatory frameworks, various firms are aiming to launch spot Bitcoin ETFs in the coming months.
The Rise of the ETF Trend
The US Securities and Exchange Commission’s (SEC) approval of 11 spot Bitcoin ETFs on January 10, after years of rejecting such products, has accelerated the ETF trend. This situation has led global regulators to adopt a more positive stance towards such products and cryptocurrencies.
The introduction of the upcoming spot crypto ETFs in Hong Kong marks a critical moment in terms of the integration of cryptocurrency into the mainstream financial world. The launch of these ETFs is seen as a strategic move aimed at capitalizing on the increasing demand in the Asian time zone.
The goal of these ETFs is to offer a regulated path for investing in digital assets, thereby promoting regular markets for primary cryptocurrencies, enhancing investor protection, and integrating digital asset platforms with traditional financial institutions.
However, challenges such as fee structures and regulatory compliance exist. Due to the limited number of licensed crypto exchanges in Hong Kong, there is pressure to keep fees at reasonable levels.
The Hong Kong Securities and Futures Commission (SFC) requires virtual asset funds to be held only in licensed digital asset trading platforms or banks that meet certain custody standards.
The Upcoming ETFs
Gary Tiu, the head of regulatory affairs and executive director at OSL, stated that the company is conducting advanced discussions with a series of fund companies, and about five to ten companies are actively researching launching such ETFs.
About five of these companies are thought to have the potential to lead the launch of the first spot crypto ETFs in Hong Kong within the year.
Livio Weng, COO of another licensed crypto exchange in Hong Kong, HashKey, similarly stated that there are about ten fund companies considering launching spot crypto ETFs in the region.
Additionally, Venture Smart Financial Holdings aims to launch a spot Bitcoin ETF in the first quarter of 2024 and manage assets worth 500 million dollars by the end of the year.
According to local media reports, existing market players like Samsung Asset Management and CSOP Asset Management are carefully monitoring these developments to assess market demand and regulatory conditions before venturing into spot crypto ETFs.