Hong Kong SFC Receives First Bitcoin ETF Application

Hong Kong SFC Receives Inaugural Application for Spot Bitcoin ETF: Potential Milestone in Crypto Investment Landscape

The Securities and Exchange Commission (SEC) recently approved the first Spot Bitcoin ETF in the United States, and Hong Kong is now preparing to follow suit. Harvest Hong Kong, one of China’s largest fund managers, led the way by submitting the first Bitcoin ETF application to the Hong Kong Securities and Futures Commission (SFC) on January 26.

This action represents a significant shift in the digital currency environment, establishing Hong Kong as a vital participant in the developing industry for crypto-based financial products.

Chinese Financial Giant Takes the Lead

Earlier this month, Venture Smart Financial Holdings Ltd. (VSFG) announced intentions to apply to the SFC for a spot Bitcoin ETF, which will be launched this quarter. Similarly, asset management organizations such as Samsung Asset Management have shown an interest in investigating the option in the future.

According to Tencent News, Harvest Fund Management submitted the first spot Bitcoin ETF application in Hong Kong to the SFC on January 26, with approval likely after the Lunar New Year.

Based on the news source, Hong Kong’s SFC aims to speed up the licensing of the first ETF after the US Securities and Exchange Commission (SEC) permitted the listing of spot crypto products this month.

The regulator plans to issue the first ETF on the Hong Kong Stock Exchange following the Spring Festival. Furthermore, the article suggests that the SFC may follow the lead of the US SEC and approve all applications at the same time.

Regulatory Bitcoin ETF Momentum in Hong Kong

According to reports, the Hong Kong SFC is actively speeding the clearance process for the country’s ETFs. Drawing on the SEC’s approach in the United States, the regulatory body is contemplating allowing numerous spot ETFs to provide a fair playing field in the market.

The planned clearance and launch date for the first Hong Kong spot Bitcoin ETF is February 10, just after the Chinese New Year. Harvest Fund may be the first to file the application, but it is not alone; several other financial institutions in the region have announced plans to create spot BTC ETFs in 2024.

Financial Organizations are Ready to Take Part

The rise in interest extends beyond Harvest Fund, with at least ten Hong Kong financial institutions actively preparing to establish spot Bitcoin ETFs. Industry companies such as Venture Smart Financial Holdings have set goals for the first quarter of 2024 to develop spot ETFs.

Notably, existing cryptocurrency businesses that have previously established futures-based crypto ETFs in Hong Kong are anticipated to compete. Samsung Asset Management, a major participant that released the Samsung Bitcoin Futures ETF in 2023, has shown an interest in investigating the development of a spot ETF, highlighting the broad industry interest in this burgeoning investment channel.

How Will Hong Kong’s Spot ETFs Compare to the US?

In terms of investment product performance following approval, a Hong Kong fund professional told Tencent News that “evaluating from the performance of the U.S. Bitcoin spot ETF, even if the Hong Kong Securities and Futures Commission authorizes several organizations at once, it may end up carrying out about the same as the U.S. market.”

However, several family office investment managers in Hong Kong told the news outlet that “there may be some disparity between the amount of Hong Kong spot ETF subscriptions and the United States.”

The investor managers went on to say that there is a genuine interest in subscribing to spot ETFs in Hong Kong, as opposed to the “difficulty of investment categories and processes” that previously prevented them from investing in Bitcoin.

Despite earlier interest and ambitions shown by various financial and asset management businesses, no organization has yet applied for a Spot Bitcoin ETF. Harvest Fund Management and the SFC have made no additional comments.

Closing Thoughts

Hong Kong’s aggressive regulatory stance and openness to cryptocurrency-based financial products have cemented its status as Asia’s premier destination for crypto activity.

The SFC’s implementation of crypto-focused laws in 2023 prepared the path for institutional and individual investors to actively participate in the cryptocurrency industry.

As the country waits for the approval of its first Bitcoin ETF, the cryptocurrency industry is closely watching Hong Kong’s evolving role in determining the future of digital asset investing.

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