Hong Kong Next Bitcoin ETF Hub After U.S. Approvals? This Chinese Financial Giant Files First Application

Hong Kong, a financial powerhouse that reversed its anti-crypto stance in recent years, could be one of the earliest front-runners in Asia to introduce spot Bitcoin exchange-traded funds (ETFs) after the landmark approval by the U.S. Securities and Exchange Commission (SEC).

Chinese fund behemoth Harvest Hong Kong has officially applied for a spot BTC ETF with the Hong Kong Securities and Futures Commission. Harvest aims to launch an ETF investing directly in the bellwether crypto after the Lunar New Year holiday on Feb. 10 as the city forges ahead with efforts to create a virtual asset hub.

First-Ever Chinese Spot Bitcoin ETF By February 10?

According to a report by Tencent News, one of China’s leading asset managers, Harvest Hong Kong, submitted a spot Bitcoin ETF filing to the Hong Kong Securities and Futures Commission (SFC) on Jan. 26. Harvest looks to debut the ETF on or after the Lunar New Year holiday, which falls on February 10, 2024.

Harvest’s application marks a watershed moment in Hong Kong’s financial scene, following closely on the heels of the US SEC’s greenlighting nearly a dozen spot BTC ETFs in the U.S. on January 10. SEC’s approval included the transformation of the Grayscale Bitcoin Trust from a closed-end fund to a spot ETF, as well as the approval of applications from Wall Street titans such as BlackRock and Fidelity Investments.

As per the report, the SFC may embrace a similar approach to the U.S. SEC by giving the regulatory nod to multiple spot ETF applications to provide fair market access. As of now, Harvest is the first company to apply with the local financial regulator. Nonetheless, at least 10 fund companies have signalled interest in launching potential spot crypto ETFs in the city in 2024. Hong Kong-headquartered Venture Smart Financial Holdings has already indicated plans to file its spot market Bitcoin ETF and hopes to commence trading by the first quarter of this year.

In December, Hong Kong regulators indicated that they are ready to consider applications for spot crypto exchange-traded funds.

There are also speculations of a potential operational contrast between the spot ETFs in the US and the ones in Hong Kong. According to TencentNews, Hong Kong spot ETFs could also offer the possibility of Bitcoin redemptions in kind, in addition to cash creation. Notably, American spot ETFs feature only cash creation and redemptions. But, the SFC has yet to comment on this element.

Soaring Interest In Stablecoins

The push for spot market BTC ETFs follows increasing interest in stablecoins as well. 

Bloomberg reports that Venture Smart Financial, Harvest, VSFG, and RD Technologies are among the entities discussing possible stablecoin trials with the Hong Kong Monetary Authority (HKMA) — the city’s de facto central bank.

The tests would evaluate use cases before the forthcoming stablecoin regulations in Hong Kong. A December consultation paper from HKMA proposed a licensing regime for fiat-backed stablecoins, positioning them as an interface between traditional finance and crypto markets.