This month’s spot Bitcoin ETF (Exchange Traded Fund) approval by the US Securities and Exchange Commission (SEC) marked a significant and historic moment for BTC and crypto adoption.
The event opened new investment possibilities for firms and traditional investors, leading several asset managers worldwide to assess their possibilities for launching Bitcoin ETFs in their specific regulatory landscapes.
Hong Kong Firm Aims For Spot Bitcoin ETF Approval
Following the approval of these investment products in the US, Hong Kong’s Securities and Futures Commission (SFC) published guidelines for spot crypto fund approvals for the first time, potentially advancing their efforts to develop a “digital-asset hub” more accessible.
Since the release of the SFC’s circular in December 2023, Hong Kong financial services companies have been weighing their options for the launch of a spot Bitcoin ETF.
Amongst them, Venture Smart Financial Holdings Ltd., also known as VSFG, has expressed its plan to present an application with the SFC to launch its ETF this quarter, as reported by Bloomberg.
Group Head of Investment and Products at VSFG, Brian Chan, expressed his opinion and VSFG 2024 goals regarding spot ETFs: “It’s a market that has huge potential,” he stated to the news site, “our goal is $500 million in assets under management by the end of the year.”
Since the SFC announced that future-based crypto ETFs were allowed in October 2022, Hong Kong has listed three ETFs: Samsung Bitcoin Futures, CSOP Bitcoin Futures, and CSOP Ether Futures. They have a combined assets estimate of $50 million.
According to the report, Samsung Asset Management wouldn’t “eliminate the possibility of exploring to launch a spot ETF.”
Similarly, Aegis Custody’s CEO Serra Wei stated that the digital asset custodian is in talks with four asset managers regarding listing spot crypto products in Hong Kong. Wei noted that, due to Hong Kong’s regulatory requirements, spot ETF issuers are likely to charge higher management fees compared to their US counterparts.
Although CSOP Asset Management didn’t respond to Bloomberg’s request for comment, Bloomberg Intelligence ETF analyst Rebecca Sin believes that CSOP “could lead the race in the Asia Pacific” for spot digital-asset ETFs, as the company’s products “account for the bulk of the funds under management in the current futures-based digital-asset ETFs in Hong Kong.”
Crypto Regulatory Landscape in Hong Kong
Recently, Hong Kong has been implementing a strategy to gain a stronger foothold in the worldwide financial sector. It has adopted a more crypto-friendly regulatory approach than China’s central government by reviewing and updating existing regulatory policies to better fit the current financial landscape.
The SFC further delved into its new approach in its recent joint circular with the Hong Kong Monetary Authority (HKMA), stating:
When the SFC formulated its regulatory approach for virtual assets in 2018, it imposed an overarching “professional investors only” restriction on various types of activities, including the distribution of funds investing in virtual assets. Since then, the virtual asset landscape has evolved rapidly and begun to expand into mainstream finance. A broader range and a larger number of investment products are now available, and provide both retail and professional investors with exposure to virtual assets.
Some of the SFC changes now allow licensed virtual-asset trading platforms to serve retail investors and have authorized virtual-asset futures exchange-traded funds for public offering in Hong Kong, with the most recent revision presenting the guideless that could allow the launch of spot crypto ETFs.
