The Securities and Futures Commission (SFC) in Hong Kong has not yet confirmed the list of approved issuers for Bitcoin exchange-traded funds (ETFs). This delay comes after the recent approvals of spot BTC ETFs in the United States earlier this year. However, there have been indications of potential roadblocks ahead, suggesting possible delays. Among the key players that have received approval from Hong Kong’s SFC are Harvest Global Investments and Bosera Asset Management (International) Co., as well as newcomers like ChinaAMC.
ChinaAMC has also announced plans to offer “virtual asset management services” with OSL Digital Securities serving as the custodian. While these ETFs are expected to be available soon, their specific launch dates have not yet been announced. The impending launch is anticipated to significantly boost the crypto market, particularly in Asia. Hong Kong is set to become one of the first regions to host an Ether ETF, a move that has not yet been seen in the U.S.
The city’s efforts to position itself as a regulated crypto hub comparable to Dubai and Singapore could attract substantial investment flows, potentially surpassing expectations. However, there are notable differences in the size of the financial markets. Hong Kong’s ETF market is significant within Asia and serves as a gateway to Chinese capital, but it is considerably smaller overall. The entire Hong Kong ETF market was valued at about $49 billion as of February 2024, which is small in comparison to the U.S. Bitcoin ETF sector alone.
Despite Hong Kong’s innovative approach that permits in-kind subscriptions and redemptions for crypto ETFs, the large difference in market size limits its impact. Nevertheless, these ETFs are expected to attract fresh funds to the crypto market, particularly as institutional investors show keen interest in regulated investment options. With institutional money flowing in, demand for Bitcoin could potentially increase, thereby potentially magnifying the impact of the halving event on its price. Renowned analyst Michaël van de Poppe has highlighted multiple factors that could influence Bitcoin’s price in the upcoming days, including the halving event, geopolitical tensions in the Middle East, and the approval of spot ETFs in Hong Kong.
Meanwhile, senior Bloomberg ETF analyst Eric Balchunas tempered expectations about the potential success of new ETFs in Hong Kong, pointing out the relatively small size of the Hong Kong ETF market and restrictions on investment from Chinese locals. The three approved issuers are smaller players in the market, with no major companies like BlackRock involved as of yet.