On Thursday, eleven spot bitcoin ETFs began trading in the US, following the landmark approval by the Securities and Exchange Commission (SEC). This move is expected to bring the cryptocurrency industry closer to the regulated world of traditional finance. The ETFs include BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, among others.
The successful launch of spot bitcoin ETFs in the US is expected to have a positive impact on Hong Kong’s regulators. It may push them closer to authorizing similar cryptocurrency funds in the city. These spot ETFs allow investors to gain exposure to virtual assets without directly buying any crypto tokens. This brings more legitimacy to the crypto industry and opens up collaboration opportunities with mainstream finance.
According to Chinese media Caixin, around 10 fund management firms are preparing to launch spot virtual asset-backed ETFs in Hong Kong. Livio Weng, the chief operating officer at crypto trading app operator HashKey Group, mentioned that up to eight companies were at an advanced stage of launching these ETFs.
The spot crypto ETF approvals in the US caused a 3.4% jump in bitcoin’s price, reaching $47,500. This is nearly three times the level it reached in November 2022 when failed crypto exchange FTX filed for bankruptcy, causing bitcoin’s price to drop below $17,000.
Mao Shixing, also known as “Discus Fish,” the co-founder and CEO of digital asset custody solutions provider Cobo, believes that Hong Kong needs to launch spot virtual asset ETFs as soon as possible. This will ensure the city remains competitive in the global cryptocurrency market and strengthens its position as a global financial center.
Donald Day, the chief operating officer at digital asset platform VDX, believes that the SEC’s decision will make its peers seriously consider whether similar ETFs would be permissible and desirable. He also noted that the SFC’s statement in December about being prepared to authorize such funds has opened a pathway for issuers to launch spot crypto ETFs in Hong Kong.
Currently, there are nine markets around the world that allow the operation of spot crypto ETFs, including Canada, Germany, Switzerland, and tax havens like the Cayman Islands and Jersey. However, mainland China is unlikely to follow suit. The Chinese government has banned banks from handling bitcoin since 2013 and forced cryptocurrency exchanges to move offshore in 2017. In 2021, the country’s regulators reiterated the state’s prohibition on all financial institutions from engaging in crypto-related activities.
China’s state media recently highlighted the risks involved in spot cryptocurrency ETFs, stating that the US approval would only make the market more frantic and provide fertile ground for illegal transactions such as money laundering.