Hong Kong Overtakes US in Crypto Investment Products with the Introduction of Spot Ether ETFs

Hong Kong has recently given its approval for multiple exchange-traded funds (ETFs) that track the spot prices of Bitcoin (BTC) and Ethereum (ETH). This regulatory move is significant for Hong Kong as it positions itself as a leading financial hub for cryptocurrencies and demonstrates its divergence from mainland China’s strict crypto regulations.

After receiving approval, Bitcoin (BTC) experienced a recovery from its recent decline on April 14. Due to geopolitical tensions, its price bounced back from above $70,000 to $61,000. Parth Chaturvedi from CoinSwitch Ventures has highlighted the potential of these spot ETFs to make crypto more accessible to novice investors and expects a significant influx of investment into Hong Kong’s crypto market.

The preliminary approval of spot Ether ETFs in Hong Kong has garnered attention, particularly from OSL’s Gary Tiu. He emphasized that Hong Kong is now ahead of the United States, which has yet to approve any spot Ether products. Angela Ang, a former regulator at the Monetary Authority of Singapore, views this as a crucial step for Hong Kong’s crypto ambitions and has noted the growing demand for exposure to Ethereum.

These ETFs are nearing readiness for public offering following the in-principle approval from the Hong Kong Securities and Futures Commission (SFC). While they are technically close to launch, there are still some technical conditions that need to be fulfilled before the official launch.

Upcoming ETFs from Bosera Asset Management and HashKey Capital will offer in-kind subscription and redemption options, allowing direct use of Bitcoin and Ether. Tiu emphasized the significant support required for this feature, especially in the retail fund space. Similar to the United States, where the approval of spot Bitcoin ETFs led to a fee war, Tiu predicts a similar competitive environment in Hong Kong.

There is speculation that mainland Chinese investors may show interest through the Southbound Stock Connect program. However, these ETFs cannot be accessed by mainland investors through the Stock Connect program. Despite this, there is optimism for potential inclusion in the future.