By
Godfrey Benjamin
April 29th, 2024
Ahead of the expected approval Chinese mainland-based equity funds are exploring opportunities in the spot Bitcoin exchange-traded fund market through their Hong Kong subsidiaries.
As Hong Kong gradually becomes the hub of cryptocurrency and anticipation builds for potential approval of spot Bitcoin exchange-traded funds (ETFs), a licensed crypto exchange in the region, HashKey says it has deployed top infrastructure and product features to support these new asset classes.
Barring any last-minute changes, the Hong Kong Securities and Futures Commission (SFC) will take the decision to greenlight spot Bitcoin ETFs in the region on Monday, next week, with product listing expected to take another two weeks.
HashKey Infrastructure Development and Integration
In an interview with The Block Livio Weng, CEO of HashKey Exchange, stated that HashKey has finalized the development of operating models for spot Bitcoin ETFs in collaboration with fund issuers ahead of the approval date. He says the company is now in the integration and functional testing phase.
“As a fund provider applying for an ETF in Hong Kong, HashKey offers underlying infrastructure support, covering trading, custody, and SSA aspects,” said he.
Figures show that HashKey’s own custody business has been in stable operation for over one year with assets under custody exceeding HK$2.2 billion ($280.7 million).
HashKey is positioned to provide essential infrastructure support, including trading, custody, and Securities Settlement and Administration (SSA) services, for these ETFs. Although the specific asset managers collaborating with HashKey were not revealed, reports suggest that at least four asset managers, both from mainland China and Hong Kong, have submitted applications with the intent to launch spot Bitcoin ETFs.
Sources familiar with the matter indicate that Hong Kong regulators are expediting the approval process for these products, and can potentially grant approval in the coming week. Unlike mainland China’s tightening regulations on cryptocurrency trading and mining, Hong Kong has taken a more welcoming stance towards crypto firms.
In June 2023, the region initiated a licensing regime for crypto trading platforms, granting licenses to two platforms, HashKey and OSL, to offer retail trading services. The Hong Kong SFC has in recent times been very busy with approval requests. Just last month, it granted crypto exchange HKbitEX licenses for regulated activities.
Expansion of the Spot Bitcoin ETF Market in Hong Kong
Speaking on the future of crypto, Weng expressed optimism that if the challenges related to on-chain staking can be addressed, the launch of spot Ethereum ETFs has huge potential for the region. He believes that Ethereum ETFs, as yield-bearing assets, may attract significant interest from large institutional investors, potentially surpassing the appeal of spot Bitcoin ETFs.
Meanwhile, ahead of the expected approval Chinese mainland-based equity funds are exploring opportunities in the spot Bitcoin exchange-traded fund market through their Hong Kong subsidiaries. This is due to the strict regulations on cryptocurrency trading and mining in mainland China.
Market watchers say as Hong Kong positions itself as a hub for cryptocurrency innovation and investment, the potential approval of spot Bitcoin ETFs represents a significant milestone, signaling growing institutional interest and regulatory acceptance of digital assets in the region.