In a significant move towards embracing digital currencies, Hong Kong has joined the ranks of countries approving spot exchange-traded funds (ETFs) for Bitcoin (BTC) and Ether (ETH). The decision, announced by the Hong Kong Securities and Futures Commission (SFC), marks a pivotal moment in the adoption of cryptocurrencies in the financial mainstream report says.
The SFC conditionally approved the first spot BTC and ETH ETFs on April 15, according to Reuters. This green light paves the way for at least three local issuers to launch their ETFs. Among them are offshore Chinese asset managers, including Hong Kong units of Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC).
Bosera Asset Management is set to collaborate with HashKey Capital, a Hong Kong-based entity, to roll out its spot crypto ETFs. Meanwhile, OSL Digital Securities, a licensed digital asset platform in Hong Kong, will serve as the sub-custodian for ChinaAMC and Harvest.
The approval comes with conditions, as is customary in regulatory processes. These include fee payments, document filing, and approval from the Hong Kong Stock Exchange (HKEX) for listing.
One notable aspect of the approval is the endorsement of the in-kind creation model for the ETFs. This means that new ETF shares can be issued using BTC and ETH, contrasting with the cash-create redemption model prevalent in the United States. Under the cash-create model, new ETF shares are generated solely with cash.
This move underscores Hong Kong’s commitment to fostering innovation in the financial sector while ensuring regulatory oversight. It also reflects the growing acceptance of cryptocurrencies as legitimate investment assets, with Bitcoin and Ether leading the charge.
The approval of spot BTC and ETH ETFs in Hong Kong is poised to open up new avenues for investors seeking exposure to digital assets in a regulated environment. It further cements Hong Kong’s position as a hub for financial innovation and reinforces the city’s status as a global financial powerhouse.
