Hong Kong may approve exchange-traded funds (ETFs) linked directly to Bitcoin and Ether as early as Monday, according to Bloomberg.

As per undisclosed sources cited by Bloomberg, several prominent entities are expected to receive approval for issuing spot-crypto ETFs. Among these are the international arm of Harvest Fund Management Co., as well as a collaboration between Bosera Asset Management (International) Co. and HashKey Capital. 

These firms are reportedly gearing up to launch the ETFs by the end of the month, pending regulatory clearance from the Securities and Futures Commission and finalization of listing details with Hong Kong Exchanges & Clearing Ltd.

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Uncertain Timeline

While anticipation mounts for the potential approval on Monday, it's crucial to recognize the fluidity of regulatory processes. The timeline remains subject to possible last-minute alterations. However, earlier reports this week hinted at Harvest's impending permission to launch a spot-Bitcoin ETF in Hong Kong. 

Notably, the SFC cleared Harvest and China Asset Management to offer virtual asset fund management on April 9, indicating a progressive stance towards cryptocurrency within the region.

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Implications for Chinese Investors

The approval of Bitcoin spot ETFs in Hong Kong holds broader implications, particularly for Chinese investors. With the Southbound Stock Connect program facilitating access to eligible shares listed in Hong Kong, these ETFs could potentially unlock a substantial demand estimated at up to $25 billion. 

Matrixport, a Singapore-based crypto services provider, suggests that mainland investors could capitalize on this opportunity, leveraging the Southbound Connect program to channel significant capital into these ETFs.

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Learning from the US Success

Hong Kong's decision to introduce spot ETFs is in line with the success witnessed in the United States. Since their launch in January, US spot Bitcoin ETFs have amassed approximately $12.58 billion in funds, as of April 11, emphasizing investor appetite for such products. 

This surge in investment has notably impacted Bitcoin's value positively, highlighting the potential influence of Hong Kong's forthcoming ETFs on the cryptocurrency market.

Hong Kong will beat the US on approving Ether ETFs if it approves it on Monday, since the US last date for approval is May 23. 

Hong Kong, however, faces stiff competition from other global financial hubs such as Singapore and Dubai in the burgeoning crypto market, despite its progressive regulatory environment.