On April 15, Hong Kong took a significant step in the cryptocurrency market by authorizing the launch of spot exchange-traded funds (ETFs) for Bitcoin and Ether.
The Hong Kong Securities and Futures Commission (SFC) granted conditional approval for the country’s inaugural spot BTC and ETH ETFs, as per a report by Reuters.
This groundbreaking move involves at least three offshore Chinese asset management firms, including the Hong Kong branches of Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC).
These firms are poised to introduce their spot Bitcoin and Ether ETFs shortly.
The collaboration for these launches includes partnerships with local companies. Bosera will work alongside Hong Kong-based HashKey Capital.
Meanwhile, OSL Digital Securities, a licensed digital asset platform, will serve as the sub-custodian for the ETFs of ChinaAMC and Harvest.
The SFC’s conditional approval is based on several requirements being met, such as fee payments, document submissions, and obtaining the necessary listing approval from the Hong Kong Stock Exchange (HKEX).
The ETFs in question will operate under an “in-kind” creation model, which allows for the issuance of new ETF shares in exchange for Bitcoin and Ether, contrasting with the cash-create redemption model more commonly seen in the U.S.
Patrick Pan, Chairman and CEO of OSL, emphasized the innovative nature of this approach in an interview with Cointelegraph. “
The in-kind subscription model for the spot BTC and ETH ETFs in Hong Kong represents a substantial innovation,” he said.
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Pan highlighted that this method would bolster market liquidity by facilitating the direct exchange of assets for ETF shares, which reduces the dependency on cash settlements and promotes continuous trading activities.
He added, “This principle is essential for ensuring market stability and is consistent with practices in both digital and traditional asset ETFs.”
Pan also commented on the preliminary approval status, noting it indicates that the firms have successfully navigated through most of the critical regulatory evaluations, bringing them closer to their launch goals.
However, he mentioned it’s still too soon to predict the exact start date for trading. “The dates are not yet confirmed.
“However, all parties involved are diligently working to expedite the launch.
“The initiation of these ETFs is expected to significantly boost capital inflow into the digital asset market in Hong Kong,” Pan explained.
Despite reaching out for further comments, Cointelegraph received no immediate responses from the SFC, Bosera, or Harvest at the time of publication.
Following the regulatory green light, the HKEX is anticipated to need about two weeks to complete the listing procedures and other necessary arrangements before the ETFs can officially begin trading.
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