China's Largest Funds Seek Spot Bitcoin ETF Approval in Hong Kong

Updated April 9, 2024 2 min read

China's Largest Funds Seek Spot Bitcoin ETF Approval in Hong Kong

China's Largest Funds Seek Spot Bitcoin ETF Approval in Hong Kong

China's Largest Funds Seek Spot Bitcoin ETF Approval in Hong Kong

China's largest fund management firms are leveraging their Hong Kong subsidiaries to apply for spot Bitcoin exchange-traded funds (ETFs). This move comes as Hong Kong positions itself as a global hub for virtual assets, providing a regulatory framework that encourages the development of the crypto industry.

Leading Chinese Funds Eyeing Bitcoin ETFs

Prominent Chinese asset managers, including Harvest Fund Management and Southern Fund, have reportedly submitted applications for spot Bitcoin ETFs through their Hong Kong branches. Harvest Fund, with over $210 billion in assets under management, and Southern Fund, managing more than $280 billion, are among the top contenders vying for regulatory approval from the Securities & Futures Commission (SFC) of Hong Kong.

The potential entry of these financial giants into the Bitcoin ETF market could bring greater legitimacy and trust to the virtual assets space in Hong Kong. By offering investors a regulated and accessible investment vehicle, these funds aim to tap into the growing demand for exposure to cryptocurrencies.

Hong Kong's Evolving Stance on Virtual Assets

Despite China's previous crackdown on Bitcoin trading and mining, Hong Kong has adopted a more open approach towards virtual assets. The city's authorities have expressed their commitment to fostering a robust and responsible virtual market development, attracting more than 220 web3 related companies to set up operations in the region.

In December 2023, the Hong Kong Monetary Authority and the SFC issued a joint circular acknowledging the increasing interest in launching spot crypto ETFs. While the SFC has granted permission for licensed crypto providers to offer crypto futures ETFs, regulatory approval for spot ETFs is still pending.

Potential Impact on the Bitcoin Market

The growing trend of Chinese funds exploring spot Bitcoin ETFs comes amid a surge in the cryptocurrency's price, which has nearly doubled since December, reaching new all-time highs above $73,000 in March 2024. The approval of spot Bitcoin ETFs from influential Chinese institutions could significantly boost trading volumes and attract a new wave of investors to the virtual assets market.

Industry experts anticipate that the first spot Bitcoin ETFs in Hong Kong could launch as early as the second quarter of 2024. This development, coupled with the increasing institutional interest in Bitcoin, could further solidify Hong Kong's position as a leading global crypto hub.

While Hong Kong's regulatory authorities have shown a willingness to support the virtual assets industry, Chinese funds must still navigate the complex regulatory landscape. The mainland Chinese government's stance against cryptocurrencies remains a potential obstacle, requiring fund managers to strike a delicate balance between compliance and innovation.

As the race for spot Bitcoin ETF approval intensifies, the success of Chinese funds in securing regulatory green light could pave the way for a new era of virtual assets investment in Hong Kong and the broader Asia-Pacific region. With the potential to unlock significant capital inflows and mainstream adoption, the launch of spot Bitcoin ETFs in Hong Kong could mark a major milestone in the evolution of the global cryptocurrency market.

See our list of Hong Kong Virtual Asset Service Providers (VASPs).