Crypto Analyzer

Hong Kong Leads the Way with Approval of Bitcoin and Ethereum Spot ETFs

Hong Kong has made history by becoming the first jurisdiction to approve the trading of Bitcoin and Ethereum cash exchange-traded funds (ETFs). While the US Securities and Exchange Commission (SEC) is still evaluating similar proposals, the Securities and Futures Commission (SFC) in Hong Kong has already given the green light to several prominent financial institutions to launch these ETFs.

Among the financial firms that have received approval from the SFC to create Bitcoin and Ethereum cash ETFs are China Asset Management, Bosera Capital, and HashKey Capital Limited. These innovative financial products now enable investors to purchase shares of Bitcoin and Ethereum directly with cash.

Furthermore, Harvest Global Investments has received preliminary approval from the Commission to develop additional cash ETFs based on Bitcoin and Ethereum digital assets, signaling a significant expansion of the digital asset investment sector in Hong Kong.

Commenting on the recent approvals, Harvest International’s CEO and IT Director, Han Tongli, remarked, “This time Harvest’s investment in two major digital asset spot ETF products has been approved in principle, which not only highlights Hong Kong’s competitive advantages in the field of digital assets but also demonstrates Harvest International’s drive to promote industry innovation and satisfaction.”

Challenges in Mainland China

In contrast, the stringent regulations on cryptocurrencies in mainland China make it unlikely for Bitcoin and Ethereum ETFs to be made available beyond Hong Kong. Issuers in Hong Kong have clarified that regulatory obstacles prevent mainland Chinese funds from investing in these cryptocurrency-linked ETFs.

The limitations imposed by mainland China’s strict stance on cryptocurrency risks have also been highlighted through disclosures made by the Hong Kong ETF issuers, debunking misconceptions about investment opportunities under the Southbound Stock Connect program.

The initiative, which facilitates cross-border investments between mainland China and Hong Kong, expressly excludes digital currency products due to China’s aversion to the associated risks of cryptocurrencies.

Promoting Digital Currency Initiatives

Meanwhile, since last July, the Hong Kong Monetary Authority (HKMA) has been actively advocating for the development of digital currencies as a mainstream medium of exchange. The banking regulator in Hong Kong has been encouraging local financial institutions to consider meeting the specific requirements of cryptocurrency exchanges, including holding regular meetings to address the needs of these clients.

Major banks such as HSBC and Standard Chartered have committed to building the necessary infrastructure to facilitate easy access to banking services for licensed cryptocurrency operators in Hong Kong.

Furthermore, prominent cryptocurrency companies like OKX, Bybit, and Huobi, founded by Chinese entrepreneurs, have expressed their intention to pursue the new licensing opportunities in Hong Kong, signaling a growing interest in the region’s digital asset market.