Giant Chinese Investment Firms Apply for Bitcoin ETFs in Hong Kong as US Interest Drops
Two of China’s largest investment firms, Harvest Fund and China Southern Fund, are reportedly seeking to launch spot Bitcoin exchange-traded funds (ETFs) in Hong Kong. This move comes at a time when investor enthusiasm for US spot Bitcoin ETFs appears to be waning, as weekly inflows slow down.
According to Securities Time, the Hong Kong subsidiaries of Harvest Fund and China Southern Fund are actively involved in the application process for Bitcoin ETFs. Harvest Fund has already submitted a proposal for a spot Bitcoin ETF to the Hong Kong Securities and Futures Commission (SFC), while China Asset Management’s Hong Kong arm has partnered with a local Bitcoin ETF custodian.
Industry analysts anticipate that these applications could receive approval as early as the second quarter of 2024. With both Harvest Fund and China Southern Fund managing assets worth $230 billion and $280 billion respectively, their participation in Bitcoin-related investment products would have a significant impact.
This development coincides with a report from CoinShares, which suggests that the hype surrounding ETFs is moderating. Last week, the inflow of digital asset investment products, including US-approved spot Bitcoin ETFs, amounted to only $646 million, compared to $862 million two weeks earlier.
However, despite this short-term decline, year-to-date inflow figures for digital asset investment products show continued growth. Over the past two weeks, the total inflow increased from $13.14 billion to $13.81 billion.
The applications for spot Bitcoin ETFs by reputable Chinese funds in Hong Kong could be seen as a bullish signal. Hong Kong’s efforts to establish itself as a cryptocurrency hub, along with its unique relationship with China, may indicate a potential softening of China’s overall stance on cryptocurrencies. This could have positive implications for the crypto market, especially as Hong Kong has received praise for its regulatory clarity.
Nevertheless, concerns remain about the long-term sustainability of Hong Kong’s favorable regulatory environment due to the expiration of its autonomy under the “One Country, Two Systems” agreement with China in 2047. Bobby Lee, the founder and CEO of Ballet, has expressed concerns about the pace of Hong Kong-China integration over the next two decades, raising questions about potential changes in the regulatory landscape.
“The question is: what would happen in the next five years [in Hong Kong]? The next 10 years? The next 20 years? Or, even the next 24 years? Would it change? I think [Hong Kong’s regulatory environment] would change,” Lee stated in an interview with BeInCrypto in August 2023.