Multiple companies have received regulatory approval to launch spot Exchange Traded Funds (ETFs) for Bitcoin and Ethereum in Hong Kong. Unlike the U.S., where only Bitcoin funds were launched in January, Hong Kong has greenlit ETFs for both key cryptocurrencies.
The Nature of Spot ETFs
Spot ETFs, which are different from the previously available futures ETFs, involve the actual delivery of the underlying asset. This means they entail direct purchases of cryptocurrency. Their introduction in the U.S. earlier this year significantly boosted the cryptocurrency market.
Major Companies Involved
China Asset Management’s Hong Kong division has secured approval from the Hong Kong Securities and Futures Commission (SFC) to manage retail assets linked to these ETFs. The company will collaborate with the OSL exchange and BOCI International for this venture. Similarly, Harvest Global Investments has partnered with OSL after receiving preliminary SFC approval for their ETFs.
Regulatory Landscape
Despite stringent restrictions in mainland China, several futures cryptocurrency ETFs are registered in Hong Kong. These are traded on exchanges and broker platforms of major banks and are actively promoted.
Licensing Regime for Crypto Platforms
In June 2023, Hong Kong launched a licensing regime for cryptocurrency trading platforms. This allowed licensed exchanges to provide services to retail investors. Licenses were granted to platforms like HashKey and OSL. Conversely, the SFC marked exchanges such as Bybit and MEXC as dubious due to their lack of licenses.
