Spot Bitcoin ETF: HashKey Prepares Infrastructure Ahead of Hong Kong Approval
Ahead of the expected approval, mainland China-based stock funds are exploring opportunities in the Bitcoin exchange-traded fund market through their subsidiaries in Hong Kong.
As Hong Kong gradually becomes a cryptocurrency hub and anticipation grows over the possible approval of spot Bitcoin exchange-traded funds (ETFs), a licensed cryptocurrency exchange in the region, HashKey says it has implemented the best infrastructure and product features to support these new asset classes.
Barring last-minute changes, the Hong Kong Securities and Futures Commission (SFC) will make the decision to greenlight Bitcoin ETFs in the region on Monday next week, with product listing expected to take other two weeks.
Can ETFs Trigger Bitcoin Bullish Rally After Halving?
The approval of the first spot Bitcoin ETFs in Hong Kong could catalyze Bitcoin’s post-halving rally, according to Herbert Sim, COO of cryptocurrency exchange Websea, who also noted that Hong Kong-based ETFs will only add to the institutional demand and flows created by large US ETF issuers like BlackRock, which he expects to continue.
Large investors, or so-called mega whales, who own at least 10,000 BTC are accumulating Bitcoin at the current price, in anticipation of next week’s approval, according to popular cryptocurrency commentator Bitcoin Munger in an April 12 post.
Development and Integration of HashKey infrastructure
In an interview with The Block, Livio Weng, CEO of HashKey Exchange, stated that HashKey has completed the development of operating models for spot Bitcoin ETFs in collaboration with fund issuers ahead of the approval date.
Figures show that HashKey’s own custody business has been in stable operation for more than a year with assets in custody exceeding HK$2.2 billion ($280.7 million). HashKey is positioned to provide essential infrastructure support, including trading, custody, and securities administration and settlement (SSA) services, for these ETFs.
Although the specific asset managers collaborating with HashKey were not revealed, reports suggest that at least four asset managers, both from mainland China and Hong Kong, have filed applications with the intention of launching Bitcoin spot ETFs. Sources familiar with the matter indicate that Hong Kong regulators are speeding up the approval process for these products and could potentially grant approval next week.
Unlike mainland China’s strict regulations on cryptocurrency trading and mining, Hong Kong has adopted a more welcoming stance towards cryptocurrency companies. In June 2023, the region initiated a licensing regime for crypto trading platforms, licensing two platforms, HashKey and OSL, to offer retail trading services.
The Hong Kong SFC has been very busy with approval applications lately. Last month, it licensed cryptocurrency exchange HKbitEX for regulated activities.
Bitcoin ETF Spot Market Expansion in Hong Kong
Speaking about the future of cryptocurrencies, Weng expressed optimism that if the challenges related to on-chain betting can be addressed, the launch of Ethereum spot ETFs has huge potential for the region. He believes that Ethereum ETFs, as yield-producing assets, can attract significant interest from large institutional investors, potentially surpassing the appeal of spot Bitcoin ETFs.
Meanwhile, ahead of the expected approval, mainland China-based stock funds are exploring opportunities in the Bitcoin exchange-traded fund market through their subsidiaries in Hong Kong. This is due to strict regulations on cryptocurrency trading and mining in mainland China.
Market watchers say that as Hong Kong positions itself as a hub for cryptocurrency innovation and investment, the potential approval of Bitcoin spot ETFs represents an important milestone, indicating growing institutional interest and regulatory acceptance of digital assets in the region.
By Leonardo Perez