China’s Largest Equity Funds Pursue Spot Bitcoin ETFs via Hong Kong Subsidiaries: Report

Chinese mainland-based equity funds are reported to have filed applications to introduce spot Bitcoin exchange-traded funds (ETFs) through their Hong Kong subsidiaries.

The development comes amid a month-long surge in crypto prices and heightened efforts by Hong Kong to establish itself as a global fintech hub.

China Equity Funds Apply for Bitcoin ETFs

According to Security Times, a Chinese state-owned newspaper, not all the companies applying have been named. However, it has been confirmed that Harvest Fund Management’s Hong Kong branch is among those awaiting approval from the Securities & Futures Commission (SFC) of Hong Kong since January.

Harvest Fund Management’s Hong Kong division introduced futures crypto ETFs in December 2022, marking the first futures crypto ETFs to launch in Asia. The SFC had granted authorization for virtual asset futures ETFs for public offering on October 31, 2022.

Meanwhile, China Asset Management’s Hong Kong division, one of China’s largest asset management companies, has reportedly entered into a cooperation agreement with Hong Kong’s licensed crypto exchange HashKey. The partnership is aimed at collectively promoting and advancing initiatives related to Web 3.0 in the asset management industry in Hong Kong.

Although a definitive timeline for spot Bitcoin ETFs in Asia has yet to be announced, industry insiders suggest that relevant applications could materialize as early as this quarter.

Hong Kong’s Crypto Sector is Growing

In December, the Hong Kong Monetary Authority and the SFC announced their readiness to consider applications for spot crypto ETFs. Following this, the U.S. Securities and Exchange Commission approved the first spot Bitcoin ETF in January of this year.

Bitcoin’s value surged to around $72,000 on Monday, nearly doubling from its December reading, with a peak above $73,000 in March. The CSOP Bitcoin Futures ETF, Hong Kong’s largest Bitcoin futures ETF, witnessed a five-fold increase in assets under management over the past five months, reaching just over $100 million.

Hong Kong has been looking to establish itself as a leading global crypto hub. In a recent address at the opening ceremony of the “2024 Hong Kong Web3 Carnival,” Hong Kong’s Deputy Secretary of the Financial Services and the Treasury Bureau, Edmond Huang, highlighted the authorities’ commitment to amending relevant laws to subject over-the-counter (OTC) trading of virtual assets to formal regulatory oversight.

Moreover, the city intends to enable intermediary institutions to offer various virtual asset services, including futures and exchange-traded funds (ETF) trading. These initiatives highlight Hong Kong’s moves to embrace and regulate the growing virtual asset sector.