As Hong Kong Debuts Bitcoin ETFs & Australia Make Plans — Will Other Countries Follow?

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The trend of spot crypto ETFs is growing globally as more regions embrace the potential of blockchain technology in traditional financial markets.

Spot crypto ETFs allow investors to gain exposure to cryptocurrencies like Bitcoin and Ethereum directly, without owning the underlying assets. Furthermore, these ETFs operate within a regulated framework, offering a safer and more transparent way to invest in cryptocurrencies compared to unregulated platforms.

The United States has recently approved its first batch of spot Bitcoin ETFs. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs from major issuers, including ARK, Grayscale, Blackrock, Fidelity, and others.

Other countries, notably Canada and some in Europe, had already launched similar products prior to the U.S. approval. Canada, for example, approved several spot Bitcoin ETFs starting in 2021, allowing investors direct exposure to Bitcoin through regulated investment vehicles.

Today, Techopedia explores Hong Kong’s Bitcoin ETF launch — with Australia looking to follow suit.

Key Takeaways

  • The trend of spot crypto ETFs is expanding worldwide as more regions recognize the potential of integrating blockchain technology into traditional financial markets.
  • Spot crypto ETFs offer investors direct exposure to major cryptocurrencies like Bitcoin and Ether without the need to manage the underlying assets themselves.
  • In a landmark decision, the SEC approved 11 spot Bitcoin ETFs from leading issuers in January 2024.
  • Hong Kong has approved its first spot crypto ETFs, with significant potential investment coming from Chinese wealth and Asia-Pacific crypto exchanges.
  • With ongoing developments, such as potential approvals in Australia and heightened interest in Asian markets like Singapore and Japan, the momentum for crypto ETFs is expected to accelerate.

Hong Kong Debuts Spot Crypto ETFs

Six spot Bitcoin and Ether ETFs debuted in Hong Kong on Tuesday, April 30 — making these the first cryptocurrency ETFs to launch in Asia.

Following Hong Kong’s approval for its first spot ETFs, several local issuers, including asset managers like Harvest Fund Management, Bosera Asset Management, and China Asset Management, were given the green light to launch these ETFs.

Potential sources of demand for Hong Kong’s spot crypto ETFs include Chinese wealth invested in the city, as well as Asia-Pacific crypto exchanges and market makers.

Bloomberg Intelligence’s Rebecca Sin estimates that Bitcoin and Ether funds in Hong Kong could amass around $1 billion over the next two years. However, Han Tongli, the CEO of Harvest Global, believes that the estimate is too conservative.

He told Bloomberg that financial products and services in Hong Kong are accepted by investors both in the West and the East, whereas the US primarily caters to the former.

Furthermore, the adoption of an in-kind ETF subscription and redemption mechanism sets Hong Kong apart. It allows for the underlying assets to be exchanged for fund units and vice versa, unlike the cash redemption model used by US Bitcoin funds.

As of today’s market close, the combined trading volume of the inaugural six Bitcoin and Ethereum spot ETFs in Hong Kong reached only 87.58 million HKD ($12 million). This figure stands in stark contrast to the U.S., where the initial trading volume of its first Bitcoin ETF soared to an impressive $4.6 billion on its debut day.

But Hong Kong’s debut always seemed like a soft launch, compared to the pent-up deman in the U.S.

Australia Could Approve Bitcoin ETFs by Year-End

The Australian Securities Exchange (ASX) is expected to grant approval for the country’s first spot Bitcoin ETFs before the end of 2024. The ASX, which accounts for 90% of Australia’s equity market, is reportedly in talks with various entities seeking to launch Bitcoin ETFs.

DigitalX Ltd., a local entity, submitted an application in February, while VanEck resubmitted its application during the same month. BetaShares, based in Sydney, has also expressed its intention to launch a Bitcoin ETF on the ASX.

In addition to the ASX, Australia-based Monochrome Asset Management has applied for a spot Bitcoin ETF with Cboe Australia, a global listing exchange and ASX’s smaller rival. Monochrome cited Cboe Australia’s expertise across Asia and broader investor access as reasons for selecting the exchange.

Momentum for Crypto ETFs Grow Globally

Global interest in cryptocurrency ETFs has been increasing, particularly following recent regulatory approvals in the United States. This momentum is expected to encourage similar developments in Asian markets, where countries are anticipated to introduce their own crypto ETFs in the near future.

Antoni Trenchev, co-founder of crypto exchange Nexo, told CNBC that Japan, Singapore, and South Korea could be next to approve similar products in the next two years.

According to Karim Saber, a research associate at crypto ETP issuer 21Shares, Asia is the main geographic destination where these approvals seem poised to take place next.

“We anticipate Singapore and Japan to increasingly pursue regulatory approval following South Korea,” he told Blockworks.

“The approval in Hong Kong could catalyze discussions this year as Asian countries vie for prominence as the next financial center for innovation.”

The Bottom Line

There has been a global trend towards the adoption of spot crypto ETFs across the world. As the U.S., Hong Kong, Canada, and potentially Australia continue to expand their crypto ETF offerings, the stage is set for a deeper, more secure engagement with digital assets across diverse global markets.

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