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Hong Kong may take a shortcut? Approval for physically-backed Bitcoin spot ETF possible in the second quarter

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Hong Kong may take a shortcut? Approval for physically-backed Bitcoin spot ETF possible in the second quarter

While Taiwan is still debating whether to allow Bitcoin ETFs, Hong Kong is reportedly considering the issuance of Bitcoin spot ETFs in the second quarter, with a different physical creation model from the US! This move is expected to provide more momentum to the Bitcoin market.

Legislator Ke Ju-jun questions the Financial Supervisory Commission: Prohibiting Bitcoin ETFs with multiple trustees would result in a lose-lose-lose situation and should protect the rights of investors.

Hong Kong may approve Bitcoin spot ETF in the second quarter

At the end of December last year, the SFC issued a joint letter stating that it is ready to accept virtual asset spot ETFs. Executives of the Hong Kong Stock Exchange also commented on this news, stating that the Hong Kong Stock Exchange is ready to embrace ETF investment opportunities. At that time, Livio Weng, the COO of Hong Kong-based crypto exchange HashKey, revealed that about 10 fund companies in Hong Kong have started exploring the possibility of launching cryptocurrency spot ETFs. Industry insiders continue to urge government agencies to approve virtual asset spot ETFs as soon as possible to prevent Asian investors from facing the risk of being "seduced" by US capital.

Hong Kong industry players urge the quick approval of virtual asset spot ETFs to avoid boosting US capital

It now appears that the Bitcoin spot ETF may not only be listed in the near future but also will be different from the physical creation model in the United States! This also means that investors can exchange physical bitcoins directly with the issuer for related spot ETF shares, which may bring more momentum to the Bitcoin market.

Eric Balchunas: Hong Kong to launch physically-backed Bitcoin spot ETF

Bloomberg ETF analyst Eric Balchunas pointed out in a post that it appears Hong Kong will allow physical creation and redemption of Bitcoin spot ETFs in the second quarter, unlike the US, which only allows cash creation. This may help quickly stimulate the management scale and trading volume of ETFs.

Since 1999, Hong Kong has been issuing index funds, including leveraged, inverse, and Bitcoin futures-based ETFs, as well as diversified commodities such as bond ETFs. By 2023, its market trading volume reached $450 billion.

Illustration of ETFs | What are the differences between the SEC's preferred ETF cash model and BlackRock's physically-backed Bitcoin ETF?