Hong Kong Leads Asia’s Crypto ETF Race with Six Spot Bitcoin and Ethereum Fund Launches

Hong Kong has become the first city in Asia to launch six spot Bitcoin and Ethereum exchange-traded funds (ETFs), giving retail investors the opportunity to trade cryptocurrencies at their current prices. The ETFs, issued by three Chinese firms – China Asset Management, Bosera Asset Management, and Harvest Global Investments – were approved for trading on Hong Kong’s stock exchange two weeks ago by its Securities and Futures Commission (SFC).
Spot Bitcoin ETFs from ChinaAMC, Bosera HashKey, and Harvest all saw gains in early trading but subsequently fell. Ethereum-based ETFs also showed promising signs initially before dropping into negative territory later on Tuesday afternoon. The price of Bitcoin was $63,218 at 3:50 a.m. ET according to Coin Metrics data; while the cost for ether stood at around $3,159 in late morning Asia time hours as cited by sources privy with news release writing companies familiar with such instruments’ pricing mechanisms.
Hong Kong is one of the first places globally that has approved an Ether-based ETF after a US regulator gave permission for Bitcoin ETFs to be created back in January 2021, but still hasn’t authorised any Ethereum funds yet. Crypto ETFs allow investors to gain exposure to cryptocurrencies without having direct ownership of the assets themselves.
Antoni Trenchev, co-founder and managing partner at crypto lending platform Nexo called Hong Kong’s move as an essential advantage over its rival Asian hub contenders – Singapore and Dubai who are also trying hard to establish a regulated digital asset marketplace for investors. “First mover advantage is everything in this game,” he added, noting that Japan, South Korea or even Singapore could approve similar products within the next two years as well.
Chief executive officers from all three Chinese ETF issuers ushered their debuts at Hong Kong’s stock exchange on Tuesday morning and emphasised that allowing regulated entry to digital asset markets through spot cryptos for retail & institutional investors would create a diverse product base, which is beneficial for the broader market.
The new spot-based crypto funds were given approval by authorities under ‘Virtual Asset Management Services’. Crypto futures ETFs have been trading on Hong Kong’s stock exchange since late 2018 as well, and these saw average daily turnover of around $6 million (513mn HKD) in Q1 2024 – up from just over $90k a year earlier.
Nexo’s Trenchev forecast that growth would be gradual for cryptos under management initially, with many investors preferring to watch and wait before entering the market fully. However, he added that demand will pick up in time as more people become comfortable trading digital assets through regulated channels. Crypto ETFs’ relatively small size is another concern given Hong Kong’s own rather compact local capital markets’ dimension: a slow start might be anticipated by observers for this segment before any notable traction develops, and it could take years to match the US$12bn of net inflows seen in its bigger cousin across the Pacific.
HashKey Exchange Executive Director Heddy Tsang welcomed these latest ETF moves because they represent an excellent chance for Hong Kong’s crypto sector to demonstrate how digital assets can be regulated sensibly and fairly, which is beneficial both for users as well as industry participants alike. She also suggested that authorities could speed up the pace of regulation in light of recent scandals involving FTX & Binance.