Hong Kong approves first spot Bitcoin and Ethereum ETFs

Hong Kong Securities and Futures Commission (SFC) has given the green light to the first spot Bitcoin and Ethereum exchange-traded funds (ETFs) in the region, according to an official announcement.

This significant development has been confirmed by several official announcements from prominent financial institutions such as China Asset Management Co. (China AMC), Harvest Global Investments, Bosera International, and HashKey Capital. The news follows recent reports that Singapore-based crypto services provider Matrixport noted that this investment vehicle could potentially unlock up to $25 billion in demand from Chinese investors through the Southbound Stock Connect program, which allows qualified mainland Chinese investors to access eligible shares listed in Hong Kong.

The SFC has granted China AMC’s Hong Kong subsidiary the rights to offer digital asset management services to investors. The firm intends to launch ETF products linked to spot Bitcoin (BTC) and Ethereum (ETH), in partnership with OSL Digital Securities, a digital asset platform, and Bank of China International-Prudential Trustee Limited (BOCI-Prudential Trustee Limited), serving as the custodian. The news comes after VanEck CEO Jan van Eck recently voiced his skepticism regarding the approval of spot Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) in May.

Similarly, Harvest Global Investments has received in-principle approval from the SFC for two spot crypto ETFs, which will be issued in collaboration with OSL. The company believes that these new products will effectively address issues such as high margin requirements, price premiums caused by the absence of short sellers, and losses from rolling positions, providing investors with a more accurate reflection of the immediate value of Bitcoin.

Bosera International and HashKey Capital have also reportedly been given the go-ahead to offer Bitcoin and Ethereum ETFs, with the two companies announcing their strategic cooperation during the 2024 Hong Kong Web3 Festival on April 6.

The cryptocurrency market has responded positively to the news of the ETF approvals. Bitcoin price has rebounded and is currently trading at $66,321, up 2.4% from the previous day, according to CoinMarketCap. Ethereum price has also been boosted by the announcement, trading at $3,250 at the time of writing, representing a 5.2% increase within the past 24 hours.

The approval of spot Bitcoin and Ethereum ETFs in Hong Kong marks a significant milestone in the mainstream adoption of cryptocurrencies and is expected to attract more institutional investors to the digital asset space. As the first jurisdiction in Asia to approve such products, Hong Kong is positioning itself as a leader in the rapidly evolving world of digital finance.

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