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Hong Kong to launch its first spot bitcoin ETFs soon

Hong Kong is gearing up for its first batch of spot bitcoin exchange-traded funds (ETFs) as the local financial regulator received an application from a major Chinese asset manager last week.

According to Tencent News, Harvest Fund Management’s Hong Kong arm submitted an application for a spot bitcoin ETF on Friday, Jan. 26, to the Securities and Futures Commission (SFC). This is the first such application in Hong Kong.

Tencent News also learned that the SFC hopes to speed up the approval of the first spot bitcoin ETF in Hong Kong and plans to list it on the Hong Kong Stock Exchange after the Spring Festival.

This comes just two weeks after the U.S. Securities and Exchange Commission (SEC) approved the first batch of U.S. spot bitcoin ETFs on Jan. 11. Tencent News learned that the SFC also accelerated its progress after the U.S. approved this type of ETF.

Data shows that among the 27 U.S. spot bitcoin ETFs, Grayscale Bitcoin Trust’s GBTC has a size of $20.2 billion. GBTC converted from a closed-end fund to a spot bitcoin ETF when the SEC approved it, with a size of nearly $30 billion at the time. It has since decreased as the bitcoin price fell. In addition, there are two ETFs with a size close to $2 billion, namely BlackRock’s IBIT, with a size of more than $1.8 billion, and Proshare’s BITO, with a size of $1.78 billion. Following them is Fidelity Fund’s FBTC, with a size of $1.6 billion.

Tencent News learned that the SFC may follow the U.S. practice of approving several applications at once. So far, apart from Harvest Fund Management, no other institutions have submitted applications, although some institutions, including Southern East Asia, have communicated with the SFC several times, but have not submitted yet.

Hong Kong fund industry insiders told Tencent News that judging from the performance of the U.S. spot bitcoin ETFs, even if the SFC approves several institutions at once, the final result may be similar to the U.S. market, that is, the spot ETFs of large institutions such as BlackRock and Fidelity Fund will grow faster in size. This is because these large institutions have a sufficiently broad investor base and more sufficient customer acquisition channels.

According to ETF Data, BlackRock’s IBIT is now ranked third in size among the more than 600 ETFs of all types issued in the U.S. in the past year. This shows that spot ETFs are more attractive to investors than other types of ETFs.

Some family office investors managers in Hong Kong told Tencent News that before this, they did not directly participate in the bitcoin market investment due to the investment category and the complexity of the operation, but they have a great interest in subscribing to Hong Kong’s spot ETFs. However, they also said that the subscription of Hong Kong’s spot ETFs may be somewhat different from the U.S. in terms of scale.

Tencent News also learned that compared with the U.S. spot ETFs, Hong Kong’s spot ETFs may accept bitcoin direct subscriptions in addition to fiat currency subscriptions. However, as of press time, the SFC could not be reached for comment.

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