After the approval of a Bitcoin spot ETF in the United States this month, the launch of the first virtual asset spot ETF in Asia has also attracted attention. Hong Kong-based financial services company VSFG announced today that it is preparing to submit an application to the Hong Kong Securities and Futures Commission (SFC) in order to launch a Bitcoin spot ETF in the first quarter. OSL, a licensed virtual asset exchange in Hong Kong, expects the first virtual asset spot ETF to be available by mid-year.
Currently, there are three virtual asset futures ETFs listed in Hong Kong: the Samsung Bitcoin Futures Active ETF, the CSOP FTSE Bitcoin Futures ETF, and the CSOP FTSE Ethereum Futures ETF. The SFC has already expressed its readiness to accept authorization applications for virtual asset spot ETFs and related funds since December last year.
According to Hong Kong Economic Times, although there are no approved spot ETFs in Hong Kong yet, there are issuers actively preparing for their launch. VSFG revealed that it has reached a cooperation agreement with a Hong Kong fund company and is preparing to submit an application for a Bitcoin spot ETF, with the aim of submitting it before the Lunar New Year and launching it in the first quarter. The company hopes to achieve an asset management scale of $500 million by the end of this year.
Zhu Chengyu, Chairman of VSFG, mentioned that listing in Hong Kong would enable them to focus on the Asian time zone. Although ETFs are products open to retail investors, VSFG has also been in talks with institutional investors from various institutions, including those allowed to participate in China, in addition to Hong Kong. There is a lot of demand in the entire Asian region, including South Korea, Japan, and Taiwan, and it is believed that more fund companies will be interested in issuing ETFs.
According to a circular issued by the SFC in December last year, approved virtual asset fund custodians are limited to virtual asset trading platforms licensed by the SFC or banks that comply with the Hong Kong Monetary Authority’s virtual asset custody standards. The Hong Kong Monetary Authority has completed industry consultations on guidelines for providing virtual asset custody services and is currently reviewing opinions before proceeding to the next step. Currently, only licensed local virtual asset exchanges in Hong Kong can provide custody services.
HashKey Group’s Chief Operating Officer, Raymond Ng, stated that more than 10 fund companies are actively preparing to launch spot ETFs in Hong Kong. Among them, 7 to 8 have entered the actual promotion stage, and multiple Hong Kong spot ETF applications have also entered the actual promotion cooperation stage with HashKey. They are striving to expedite the launch of spot ETFs in Hong Kong in the coming months.
HashKey pointed out that these funds may first need to choose licensed exchanges for custody of underlying assets, as well as trading and clearing services. HashKey may also launch a shared regulatory agreement to assist fund managers.
OSL’s Executive Director and Head of Regulatory Affairs, Dior Ding, stated that OSL is in close communication with many fund companies, and there are 5 to 10 fund companies conducting research. It is expected that within 5 companies, the launch of the first spot ETF can be accelerated and achieved by mid-year.
It is worth noting that currently there are only two licensed virtual asset trading platforms in Hong Kong. Dior Ding admitted that this puts pressure on ensuring that the fees for ETFs are not too high, as the United States already serves as an objective reference, and the Hong Kong market is extremely transparent.
As an issuer of virtual currency futures ETFs, Samsung Asset Management (Hong Kong) ETF Investment Strategist, Pearl Siu, pointed out that the company already has related futures products and is interested in spot products as well. However, there are currently no updates, and many banks have not distributed virtual asset futures ETFs. Even if spot ETFs are launched, they may still face related issues.
Wang Zhuofeng, Head of Sales (Asia Pacific) at CSOP Asset Management, another issuer of virtual currency futures ETFs, stated that futures ETFs are simpler to operate and can eliminate systemic risks. Spot ETFs, on the other hand, involve higher risk management and reliance on custody, trading counterparties, etc. Currently, launching another similar product may not be cost-effective, so they will observe market demand before considering it.