Hong Kong’s digital asset hub drive in full throttle with approval of ETFs

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Hong Kong’s drive to be a digital asset hub progresses as the territory approves several digital asset exchange-traded funds (ETFs) managed by China Asset Management, Harvest Global, Bosera, and HashKey.

Hong Kong’s top financial sector regulator approved the applications of several spot BTC and ETH exchange-traded funds (ETFs) on Monday, as the territory continues its seeming push to become a digital asset hub for the region.

China Asset Management, a prominent Chinese asset manager, announced that it had received approval from the Securities and Futures Commission (SFC) of Hong Kong, the territory’s securities and futures regulator, to provide digital asset management services to investors.

“There are plans to issue ETF products that can invest in spot Bitcoin and spot Ether,” the company said.

The spot BTC and ETH ETFs will be issued in collaboration with OSL and BOCI International. OSL, which provides a range of services, including brokerage, custody, exchange, and SaaS,
said it would act as the “first virtual asset trading and sub-custodian partner” of China Asset Management for the upcoming ETFs.

Harvest Global Investments also received in-principal approval from the SFC for two spot digital asset ETFs, which will be issued in collaboration with OSL.

“In this collaboration, OSL leverages its robust infrastructure to provide a secure trading environment essential for the ETF’s operation, managing the underlying assets with precision and reliability,” OSL said in an April 15 statement.

Meanwhile, Bosera Asset Management and HashKey Capital received conditional approval from the regulator for two spot digital asset ETFs. The pair will work together to launch a spot BTC ETF, the Bosera HashKey BTC ETF, and a spot ETH ETF, the Bosera HashKey Ether ETF.

“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 quoted by The Block.

Hong Kong as a digital asset hub

Hong Kong has been making itself conspicuous in the digital asset space, particularly in contrast to its closed-off sovereign state, China, where digital asset trading and mining
have been banned since 2021.

In 2023, a raft of regulations was announced in Hong Kong, which sought to shore up digital asset rules while potentially laying the groundwork for the territory to become the next “crypto-hub.”

In January, the Hong Kong Monetary Authority (HKMA) laid out its plans for the comprehensive regulation of stablecoins, which would include regulating the governance, issuing, creation, and destroying of ‘in-scope’ stablecoins, as well as the stabilization and reserve management arrangements of stablecoins and wallets.

A month later, the SFC published its proposed rules for digital asset trading platforms, including an unexpected change of heart that would allow retail investors to access locally licensed exchanges.

In March, Hong Kong launched Project Ensemble to push for a wholesale blockchain-powered central bank digital currency (CBDC). The central bank said the CBDC project would support the development of a “tokenization market” in the region via experiments with innovative financial market infrastructure.

Shortly after, a top official at the city-state’s central bank confirmed Hong Kong would be issuing new guidelines for commercial lenders seeking to adopt distributed ledger technology (DLT).

This week’s approval of several digital asset ETFs provides further evidence that the territory is increasingly embracing blockchain and DLT technology. A trend that, for now at least, China has not attempted to curtail.

Watch: The future of digital asset trading