Hong Kong recently joined the list of countries approving Bitcoin and Ethereum spot exchange-traded funds (ETFs). The Securities and Futures Commission (SFC) granted conditional approval for the first such ETFs on April 15. Local regulators permitted at least three local issuers, including Harvest Fund Management, Boshi Asset Management, and the Hong Kong subsidiary of China Asset Management (ChinaAMC), to launch spot Bitcoin and Ethereum ETFs.
Bosera is set to introduce a spot crypto ETF in collaboration with HashKey Capital, a Hong Kong-based firm. OSL Digital Securities, licensed in Hong Kong, will act as the sub-custodian for China Asset Management and Harvest Fund. Notably, these ETFs will follow a physical model, allowing the creation of new ETF shares using Bitcoin and Ethereum directly, rather than solely relying on cash, as is the case with the cash creation model adopted by spot Bitcoin ETFs in the United States.
Patrick Pan, chairman and CEO of OSL, emphasized the significance of the physical subscription model, citing its ability to reduce reliance on cash settlement and enhance market liquidity. He noted that while receiving in-principle approval is a significant milestone indicating progress towards launch, the exact commencement date for trading spot Bitcoin ETFs in Hong Kong remains undetermined. Nevertheless, stakeholders are diligently working to expedite the process, expecting a substantial increase in capital inflows into Hong Kong's digital asset market upon the ETFs' launch.
The approval process involves various conditions, including payment of fees, document filing, and listing approval from the Hong Kong Stock Exchange (HKEX). Upon receiving conditional authorization from the SFC, ETF applicants must fulfill these requirements before finalizing listing procedures and other arrangements, a process expected to take approximately two weeks following the SFC's approval.
Despite efforts to gather comments from relevant parties such as the SEC, Bosera, and Harvest, responses were not obtained at the time of publication. The impending launch of spot Bitcoin and Ethereum ETFs in Hong Kong marks a significant development in the global cryptocurrency landscape, potentially paving the way for further integration of digital assets into traditional financial markets.
