Hong Kong is serious about Bitcoin ETFs


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After the success achieved on the US stock exchanges, now even the Hong Kong stock exchange seems seriously intent on launching Bitcoin ETFs.

On the contrary, there is a hypothesis circulating that they may even want to do better to challenge the USA in this field. 

Bitcoin ETFs on the Hong Kong Stock Exchange

ETFs on spot Bitcoin traded on US exchanges only allow the purchase and sale of their shares in cash, that is, in dollars. 

In Hong Kong, however, they seem intent on adding the possibility of buying and selling their shares in cash as well as doing so directly in BTC. 

According to the ETF expert at Bloomberg, Eric Balchunas, this difference could help grow the AUM and trading volumes of Bitcoin ETFs in the Southeast Asian region, including China, which is rapidly growing. 

Currently, there are no ETFs (or ETPs) on Bitcoin on Chinese stock exchanges, also because China has effectively banned crypto trading. 

However, it seems that they are seriously intending to add spot Bitcoin ETFs to the Hong Kong stock exchange, which despite being Chinese territory for years, is still a special administrative region with a certain degree of autonomy. 

This makes it possible, for example, to launch Bitcoin ETFs on the stock exchange without China necessarily having to withdraw the ban on crypto

The new Bitcoin ETF applications in Hong Kong

In January, the first request for the issuance of an ETF on Bitcoin was presented at the Hong Kong Stock Exchange. 

It was a request from one of the main asset management companies in China, Harvest Global Investments, and it is hypothesized that the SFC of Hong Kong (Securities and Futures Commission) may express its opinion on it as early as June.

Instead, the news that the asset manager VSFG, together with partner Value Partners, has also submitted an application for the issuance of a similar ETF, came out yesterday. 

According to some rumors circulating in Hong Kong, there are 10 financial institutions that have already planned to submit similar applications. 

The SFC had opened up to ETFs on Bitcoin spot just as they made their debut on US exchanges in January. 

The fact is that it takes months to carefully examine all the details of this type of proposals before being able to approve them, so the government agency has not been able to pronounce on it yet. 

It should not be forgotten that Asian markets are the second largest in the world in terms of volumes, in the crypto sector, after the American ones, so it would be rather strange if Bitcoin ETFs existed only on American and European exchanges. 

Bitcoin ETFs

The peculiarity that is making Bitcoin ETFs successful products in the USA is that they allow investing in BTC, albeit indirectly, without having to handle the tokens, and above all using investment platforms that are already used for stocks or forex. 

In other words, many investors and speculators who are not at all accustomed to using crypto exchanges suddenly had easy access to this new type of investment that they had largely ignored before because it was too far from their habits. 

This has been true in the USA, where more than $11.7 billion of new capital has entered the Bitcoin ETF market since January 11th. 

Last year it was predicted that within two or three years the new Bitcoin ETFs could attract one or two hundred billion dollars, and after two and a half months they have already attracted almost 12. Projecting this trend into the rest of 2024 and 2025, the previous forecasts would be confirmed. 

However, it will probably also be necessary to add the capital entering the Chinese markets, even though the Hong Kong stock exchange is mainly oriented towards foreign markets, while the one aimed at the Chinese market is the Shanghai stock exchange. 

However, if these products were to be successful in Hong Kong, it is easy to imagine that sooner or later they could also arrive on the Shanghai stock exchange. 

Tokenized Gold

As proof that Hong Kong has started taking the crypto world seriously, a gold collateralized token issued by HSBC has been made available to retail investors. 

HSBC is one of the largest banking groups in the world, and despite being headquartered in London, it is also very active in Asian markets. 

The Hongkong and Shanghai Bank was founded in 1865 in China by Thomas Sutherland, when Hong Kong was still a British colony. 

The following year it changed its name to The Hongkong and Shanghai Banking Corporation, and a few years before Hong Kong’s return to China it changed its name to HSBC Holdings and moved to London.

It is still one of the main financial operators in Hong Kong. 

HSBC is tokenizing gold for retail investors in Hong Kong, and its gold token (HSBC Gold Token) is a kind of stablecoin minted on the Orion digital asset platform, owned by the bank itself, and available through HSBC Online Banking and HSBC HK Mobile App.