Hong Kong regulator approves bitcoin and ether ETFs

Opinions are divided on the wider market impact.

Following the US SEC’s approval of bitcoin ETFs in January, the Hong Kong regulator has gone a step further, giving the green light to both ether and bitcoin ETFs.

The Hong Kong Securities and Futures Commission (SFC) confirmed approval of China Asset Management and Bosera Asset Management bitcoin ETFs, the firms confirmed. And Harvest Global has received approval in principle for both bitcoin and ether ETFs.

It’s the first major economy and the first in Asia to take the move, which coincides with the upcoming bitcoin halving predicted to happen around April 20.

“The introduction of the Virtual Asset Spot ETFs not only provides investors with new asset allocation opportunities but also reinforces Hong Kong’s status as an international financial center and a hub for virtual assets,” Bosera said in a statement.

Market watchers say these factors combined could lead to another crypto market rally, as influencers took to X to voice their excitement.

Spot BTC/ETH ETFs have been much anticipated globally, and viewed as a transformative vehicle for funnelling substantial funds and investors into the digital asset space. The direct exposure mechanism these ETFs offer simplifies investment in digital assets like bitcoin, enhancing accessibility and market liquidity, said OSL, the asset trading platform and sub-custodian for Harvest.

“I think the ether ETF could be more influential and important compared to that of bitcoin.”

Adrian Wang, CEO, Metalpha

The SFC told Reuters it issues a conditional authorization letter to an ETF application if it generally satisfies its requirements, subject to various conditions, including fee payments, filing of documents, and the Hong Kong Stock Exchange’s (HKEX) listing approval.

At least three offshore Chinese asset managers will launch the virtual asset spot ETFs soon, Reuters added.

‘First of a kind’ ether ETF

The industry will have its eye on the ether ETF as it is the first of its kind.

“I think the ether ETF could be more influential and important compared to that of bitcoin, as investors have options to gain bitcoin exposure with bitcoin-related stocks like mining companies, but there are no ETH-related stocks as of now,” Adrian Wang, CEO, Metalpha, told The Block.

Despite the eurphoria, some speculate that the upcoming halving could trigger a mass sell-off to the tune of $5 billion.

“The crypto market could face a significant challenge in a six-month ‘summer’ lull as bitcoin miners prepare to sell off substantial portions of their BTC inventories. These inventories, painstakingly built over the past few months, could disrupt the market dynamics,” Markus Thielen, Head of Research, 10x Research, said.

This is a typical scenario ahead of the halving, where miners stock up on BTC, leading to a supply/demand imbalance and a subsequent rally in bitcoin prices. Altcoins, in particular, could bear the brunt of this situation.”