Hong Kong is Set to Receive First Spot Bitcoin ETFs and Stablecoin

Hong Kong is preparing to expand its crypto market infrastructure this year, with plans to implement Bitcoin exchange-traded funds (ETFs) and stablecoin regulations.

Harvest Fund (HFM), a China-based asset manager, has applied with the Hong Kong Securities and Futures Commission to launch a spot Bitcoin ETF on or after February 10th, the Lunar New Year holiday.

While information about the Harvest Fund Bitcoin ETF is limited, reports indicate that Hong Kong’s regulatory body may approve multiple spot Bitcoin ETF applications, mirroring the approach taken by the US SEC to ensure fair market access.

Other regional financial institutions have expressed interest in launching spot Bitcoin ETF products in Hong Kong by 2024.

This development comes after Livio Weng, Chief Operating Officer of cryptocurrency exchange HashKey, revealed that approximately ten asset management firms are actively working on spot crypto ETFs for Hong Kong, with applications already submitted to the Hong Kong Securities Regulatory Commission.

Venture Smart Financial Holdings (VSFG) has announced its intention to launch a spot Bitcoin ETF in Q1 of this year.

In parallel, stablecoins are gaining popularity in Hong Kong. Companies such as Harvest Global Investments, RD Technologies, and VSFG are reportedly in talks with the Hong Kong Monetary Authority (HKMA) about possible stablecoin trials. The trials aim to investigate use cases ahead of Hong Kong’s impending stablecoin regulations.

In December, the HKMA issued a consultation paper outlining the licensing requirements for fiat-pegged stablecoins, positioning them as a link between traditional finance and crypto.

Sean Lee, Senior Advisor and Head of Stablecoin at VSFG stated that the company is “applying for sandbox inclusion to demonstrate the potential of programmable digital money while fulfilling prudential requirements.”

An HKMA spokesperson confirmed preparations for the stablecoin sandbox arrangement, emphasizing the importance of applicants demonstrating “a reasonable plan on issuing FRS in Hong Kong.” FRS, or “fiat-reference stablecoin,” is a stablecoin that is tied to the value of a fiat currency and backed by a government-issued currency.

Last week, Hong Kong reportedly indicated that the city will see the launch of its first spot crypto exchange-traded funds (ETFs) by the middle of 2024.