Giant Chinese Funds Call for Bitcoin Spot ETF in Hong Kong
Two major Chinese investment funds are filing for spot Bitcoin ETFs in Hong Kong. This development comes as interest in US spot Bitcoin ETFs appears to be waning. Hong Kong’s ties to China raise questions about long-term regulatory sustainability.
Two of China’s investment giants, Harvest Fund and China Southern Fund, are seeking spot Bitcoin exchange-traded funds (ETFs) in Hong Kong.
This move coincides with declining investor interest in US spot Bitcoin ETFs, as evidenced by slowing weekly inflows.
Industry experts anticipate that cryptocurrency-focused ETFs will receive approval by the second quarter of 2024. Southern Fund has the distinction of introducing Asia’s first bitcoin futures-based ETF, dubbed “Southern Dongying Bitcoin Futures ETF.”
A source close to Harvest Fund’s strategic initiatives shared with a local journalist, “We are also organizing the Bitcoin business, and we are also launching related products in the Hong Kong market through the platform of the Hong Kong subsidiary, but They are not futures ETFs.”
Chinese Giants Set Their Sights on Hong Kong Bitcoin Spot ETFs
Securities Time reported that the Hong Kong subsidiaries of both Harvest Fund and China Southern Fund are actively participating in the Bitcoin ETF application process. Additionally, they participate in the implementation process.
Harvest Fund, in particular, has filed a proposal for a spot Bitcoin ETF with the Hong Kong Securities and Futures Commission (SFC). Moreover, China Asset Management’s Hong Kong division has partnered with a Hong Kong-based Bitcoin ETF custodian.
Industry analysts predict that these applications could gain approval as early as the second quarter of 2024. With $230 billion and $280 billion in assets under management, respectively, Harvest Fund and China Southern Fund would significantly raise participation in investment products related to Bitcoin.
The timing aligns with a CoinShares report that notes “signs of moderating enthusiasm for ETFs.” Last week, the inflow of digital asset investment products, including US-approved spot Bitcoin ETFs, amounted to just $646 million, a figure that reflects a decrease from $862 million two weeks earlier.
Despite this short-term decline, inflow figures for digital asset investment products so far this year show growth. Two weeks ago, total inflows reached $13.14 billion; last week, this figure increased to $13.81 billion.
Giant Chinese Funds Could Be a Bullish Sign for Bitcoin
Spot Bitcoin ETF filings in Hong Kong by reputable Chinese funds could be a bullish sign. Hong Kong’s determination to establish itself as a crypto hub, in addition to its unique relationship with China, hints at a possible softening of China’s overall crypto stance.
This could have far-reaching positive implications for crypto markets. Additionally, key industry figures have praised Hong Kong’s regulatory clarity. However, Hong Kong’s autonomy under the “One Country, Two Systems” agreement with China will expire in 2047.
The above raises questions about the long-term sustainability of Hong Kong’s favorable regulatory environment. Bobby Lee, founder and CEO of Ballet, expressed this concern during an August 2023 interview with a media outlet.
Lee questioned the pace of integration between Hong Kong and China over the next 23 years. This, highlighting the eventual unification of currencies and systems and, potentially, supervision under a single framework. Lee stated the following:
“The question is: what would happen in the next five years [in Hong Kong]? The next 10 years? The next 20 years? Or even the next 24 years? Would it change? I think [Hong Kong’s regulatory environment] would change.”
By Audy Castaneda