Hong Kong has given conditional approval for the launch of exchange-traded funds (ETFs) that directly invest in bitcoin and ether, two major cryptocurrencies. This move positions Hong Kong as a key player in the evolving and often volatile virtual asset market. Notably, Hong Kong is ahead of the US in this regard, as the US Securities and Exchange Commission (SEC) has yet to approve an ether ETF.
The Securities and Futures Commission (SFC) of Hong Kong has granted conditional approval to Bosera Asset Management, an overseas arm of a mainland Chinese fund house, and Hong Kong-based HashKey Capital to jointly launch spot crypto ETFs. This approval was announced in mid-April. Additionally, other Chinese fund managers, such as Harvest International and China Asset Management Company (ChinaAMC), are also expected to receive approval from the SFC soon, as reported by Caixin. ChinaAMC has indicated that it is developing crypto ETF products following its approval to provide virtual asset management services.
However, these crypto ETFs will not be accessible to investors from mainland China.
Joshua Chu, a crypto and fintech lawyer based in Hong Kong, has pointed out that this restriction might limit Hong Kong’s competitive edge in the ETF market.
The SFC established the rules for spot crypto ETFs, including those for ether, in December. This makes Hong Kong the first Asian jurisdiction and the first major international financial center to approve such products. Meanwhile, the SEC has approved spot bitcoin ETFs but has continuously delayed a decision on ether ETFs. A ruling from the SEC is anticipated later this month.
There is significant pressure on the SEC to act, as bitcoin ETFs have seen over $200 billion in trading volume since January, according to The Block, a crypto news and data outlet.
As of now, no ETFs have been officially approved, and the SFC has not made a formal announcement. Conditional approvals allow firms to prepare for the launch, including applying to Hong Kong Exchanges and Clearing (HKEX) to list the ETFs. Spot crypto ETFs offer a way for investors to gain exposure to cryptocurrencies without the need for blockchain wallets or other technical requirements, and they can also be included in retirement funds, enhancing their appeal to mainstream investors.
