On April 10th, two individuals familiar with the situation revealed that spot bitcoin exchange-traded funds may be introduced in Hong Kong this month, with the initial approvals expected to be disclosed next week. If this timeline holds true, Hong Kong would become the first city in Asia to provide these widely sought-after ETFs, which is much quicker than the industry's anticipated launch timeframe for sometime this year. One of the sources mentioned that regulators have expedited the approval process.
Amidst the challenges of the pandemic, China's economic slowdown, and tensions with the United States, Hong Kong is striving to enhance its appeal as a global financial center. Hong Kong authorities are focused on boosting the city's allure for financial trading, with the introduction of Hong Kong ETFs seen as a significant step. Adrian Wang, CEO of Metalpha, a crypto wealth manager based in Hong Kong, believes that the introduction of Hong Kong ETFs has the potential to attract new global investment and elevate the adoption of cryptocurrencies to new levels.
In January, the U.S. introduced the first exchange-traded funds (ETFs) listed in the U.S. to monitor spot bitcoin, attracting approximately $12 billion in net inflows, according to data from BitMEX Research. Bitcoin has experienced a growth of over 60% this year and reached a record high of $73,803 in March. Its current trading price is approximately $69,000 on Wednesday. Two sources have revealed that at least four mainland Chinese and Hong Kong asset managers have applied to launch the ETFs.
China Asset Management, Harvest Fund Management, and Bosera Asset Management's Hong Kong units are among the applicants, as reported by two individuals and a third source. The sources, who were not authorized to speak to the media and chose to remain anonymous, revealed this information. Both Hong Kong's Securities and Futures Commission (SFC) and the three Chinese companies declined to provide any comments. It was reported that China Asset Management and Harvest Fund Management's Hong Kong units received approval this month to manage portfolios with investments exceeding 10% in virtual assets, as stated on the SFC's website.
The parent companies of these firms are some of the largest mutual fund companies in China, each managing assets of over 1 trillion yuan ($138 billion). Despite the ban on cryptocurrency trading in mainland China, offshore Chinese financial institutions have shown strong interest in participating in the development of crypto assets in Hong Kong. In late 2022, Hong Kong approved its first ETFs for cryptocurrency futures, with the largest one, the CSOP Bitcoin Futures ETF (3066.HK), experiencing a seven-fold increase in assets under management since September to approximately $120 million. Value Partners, based in Hong Kong, has also expressed interest in launching a spot bitcoin ETF, although it has not confirmed if it has submitted an application. (Note: The exchange rate is $1 = 7.2305 yuan).