Hong Kong set for influx of spot Bitcoin ETFs in 2024

The landscape for spot Bitcoin ETFs in Hong Kong is becoming increasingly competitive, with several firms actively exploring their launch.

Value Partners and VSFG, the first virtual asset manager approved by Hong Kong’s Securities and Futures Commission, have announced a strategic partnership for the development of a spot Bitcoin ETF in Hong Kong.

They signed a Memorandum of Understanding to collaborate on innovative investment solutions, combining virtual assets with traditional investment vehicles for both retail and institutional investors.

The proposed spot bitcoin ETF will track Bitcoin’s spot prices

This partnership emerges amid a growing demand for virtual asset investment solutions in Hong Kong. It aims to bolster Hong Kong’s status as a leading International Virtual Assets Centre. A key initiative of this collaboration is the development of a spot bitcoin ETF in Hong Kong, leveraging the companies’ expertise to gain first-mover advantages.

The proposed spot bitcoin ETF will track Bitcoin’s spot prices, offering a novel way for investors to engage with this asset through traditional financial infrastructure. It promises increased flexibility, transparency, and liquidity, appealing to a broad range of investors.

Value Partners, with over 30 years in asset management, brings significant experience in various investment products, including ETFs. VSFG’s technical expertise as Hong Kong’s pioneering virtual asset manager, demonstrated by launching the city’s first regulated bitcoin fund in June 2020, is a vital asset for this venture.

June Wong, Chief Executive Officer at Value Partners, said: “To bring digital investment solutions to investors as we eye on the untapped opportunities in the prevailing trend of virtual assets, we have made the strategic move to embark on this partnership with VSFG, a pioneering virtual asset manager in Hong Kong. The plan to launch a spot bitcoin ETF marks our first collaborative initiative, offering Hong Kong investors exposure to the world’s largest digital asset, all while enjoying the convenience and efficiency of the ETF vehicle. Leveraging Value Partners’ extensive knowledge and track record in managing ETFs as well as VSFG’s profound experience, we are well-equipped to offer our clients with more investment options, particularly in virtual assets, helping them capture market opportunities and navigate this dynamic and evolving space.”

Lawrence Chu, Chairman at VSFG, added: “We have seen a rapid evolution and great potential of the global virtual asset landscape over the past few years, and Hong Kong is no exception. At VSFG, we have been diligently planning and engaging in discussions with market practitioners on the positive momentum for the virtual asset realm and hope to provide more investment options for investors through spot virtual asset ETFs. Through our combined efforts with Value Partners on the development of a spot bitcoin ETF in Hong Kong, we aim to support Hong Kong to become an international virtual assets centre.”

Hong Kong as an international virtual assets center

The landscape for spot Bitcoin ETFs in Hong Kong is becoming increasingly competitive, with several firms actively exploring their launch. Gary Tiu, executive director and head of regulatory affairs at OSL, has revealed that they are in advanced discussions with multiple fund companies. Approximately five to ten companies are considering launching such ETFs, with around five of these making more rapid progress. This could lead to the introduction of Hong Kong’s first spot crypto ETFs within the year.

HashKey, a licensed crypto exchange in Hong Kong, supports these observations. Livio Weng, the COO of HashKey, mentioned that around ten fund companies are contemplating the launch of spot crypto ETFs in the region.

Adding to the competitive landscape, Venture Smart Financial Holdings plans to launch a spot bitcoin ETF in the first quarter of 2024. They aim to manage assets worth $500 million by year-end.

Current market players like Samsung Asset Management and CSOP Asset Management are closely watching these developments. They are assessing market demand and regulatory conditions before deciding to enter the spot crypto ETF market. This heightened interest and activity indicate a significant shift in Hong Kong’s virtual asset landscape, positioning the city as a potential hub for cryptocurrency investment products.