Spot Bitcoin ETFs to Hit Hong Kong This Year

The OSL is in active discussions with numerous fund companies, exploring the creation of spot crypto Exchange-Traded Funds (ETFs), as per reports from the Hong Kong Economic Journal  

Gary Tiu, a representative from OSL, shared insights into the ongoing talks with fund companies. According to Tiu, five to ten companies are currently considering the development of spot crypto ETFs, with around five of them making notable progress. The possibility of witnessing the debut of these ETFs in Hong Kong by mid-2024 is on the horizon.

Tiu acknowledged the need to keep fees reasonable, given the limited number of licensed crypto exchanges in Hong Kong. As per Tiu, with only two such exchanges currently operating in the city, the collaboration with fund companies demands careful consideration of fee structures to ensure accessibility and inclusivity.

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Spot Crypto ETFs: A Pivotal Development

Speaking to The Block, Tiu emphasized the significance of introducing spot crypto ETFs in Hong Kong. He cited multiple advantages, including fostering orderly markets for underlying digital assets, establishing a model for local investor protection, and accelerating integration between regulated digital asset platforms and traditional financial institutions.

Tiu's remarks echo those made by HashKey, another licensed crypto exchange in Hong Kong. HashKey has been in discussions with asset managers exploring the potential launch of spot crypto ETFs, with approximately ten fund companies actively exploring this avenue.

Adding to the momentum, Venture Smart Financial Holdings Ltd, a Hong Kong-based financial services firm, has announced plans to potentially launch a spot bitcoin ETF in the first quarter of 2024. The company aims to grow the ETF's assets under management to $500 million by the end of the year.

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Regulatory Preparations

Hong Kong's regulatory bodies, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), have taken proactive steps to prepare for the introduction of spot crypto ETFs. Circulars published in December outline the requirements for these ETFs, emphasizing transactions through SFC-licensed crypto platforms or authorized financial institutions.

Currently, Hong Kong features several futures-based crypto ETFs, such as the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.