Hong Kong financial regulator approves exchange-traded funds for Bitcoin, Ether as it seeks to become crypto capital

Hong Kong’s financial regulator has issued provisional approvals for spot exchange-traded funds for Bitcoin and Ether, the two biggest cryptocurrencies, as the city pushes ahead with efforts to become a major centre for the regulated trading of digital assets.

The move follows the approval of spot Bitcoin ETFs by the US SEC at the beginning of the year, a perceived shift toward legitimacy that has helped push Bitcoin prices sharply higher since late last year.

The US authority has not yet approved an Ether ETF, however, and may never do so, asset managers have said, making Hong Kong’s move appear that much more of a pioneering step.

Such funds allow mainstream investors to buy assets directly linked to the value of a cryptocurrency without having to directly own such assets themselves, which would necessitate potentially cumbersome technical measures such as creating and maintaining a digital wallet.

Mainstream investors

The funds are seen as opening up interest in cryptocurrencies to a potentially vastly larger pool of mainstream investors.

Hong Kong has been pursuing a crypto regulation regime since last summer that has included the establishment of licensed retail cryptocurrency trading platforms based in the city.

The city’s Securities and Futures Commission (SFC) has now approved three ETF providers, including ChinaAMC, Harvest Global and Bosera International.

ChinaAMC said it received approval for “virtual asset management services” and is “actively deploying resources in the development” of a spot Bitcoin and Ether ETF.

Pioneering step

Bosera International, the overseas arm of Mainland Chinese fund house Bosera Asset Management, said it had received “conditional approval” to jointly launch spot crypto ETFs with Hong Kong virtual asset firm HashKey Capital.

The SFC published rules for allowing spot crypto ETFs in December and is the first Asian financial regulator to approve such funds.

The regulator is understood to have issued conditional approvals in order to allow firms to move ahead with preparations to offer the funds, with final approvals coming later.