Possible Approval of Physical Bitcoin ETF for Season 2 of Hong Kong’s Overtaking on the Curve?

While Taiwan is still contemplating whether to allow the trading of Bitcoin ETFs, news from Hong Kong suggests that it may approve the issuance of Bitcoin spot ETFs as early as the second quarter, with a different physical creation model from the United States. This will bring more support to the Bitcoin market.

Last December, the Securities and Futures Commission (SFC) in Hong Kong released a joint announcement stating that it was ready to accept virtual asset spot ETFs. Executives from the Hong Kong Stock Exchange also voiced their support, stating that the exchange was ready to embrace ETF investment opportunities. At that time, Livio Weng, the CEO of the Hong Kong-based crypto exchange HashKey, revealed that around 10 fund companies in Hong Kong had begun exploring the possibility of launching crypto spot ETFs. Industry insiders have also continued to urge government agencies to promptly approve virtual asset spot ETFs to avoid the risk of Asian investors lifting US capital.

Now it appears that not only is a Bitcoin spot ETF likely to be listed in the near future, but it will also have a different physical creation model from the United States. This means that investors will be able to exchange physical Bitcoin directly with the issuer for related spot ETF shares, which could provide more support to the Bitcoin market.

Eric Balchunas, an ETF analyst from Bloomberg, pointed out that it seems Hong Kong will allow the physical creation and redemption of Bitcoin spot ETFs in the second quarter (unlike the United States, 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-tracking funds, including leveraged, inverse, Bitcoin (currently only futures-based), and bond ETFs, among other diversified products. By 2023, the market trading volume in Hong Kong is expected to reach USD 450 billion.

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Translation credits: OpenAI’s GPT-3.