Hong Kong’s Securities and Futures Commission (SFC) has conditionally approved new exchange-traded funds (ETFs) for Bitcoin (BTC) and Ethereum (ETH). These funds are managed by the Hong Kong branches of Harvest Fund Management, Bosera Asset Management, and China Asset Management (ChinaAMC).

The SFC has not fully approved but instead issued “conditional authorization letters” to several Bitcoin and Ethereum ETF applications. This initial approval signifies that the applications meet most of the SFC’s standards but still need to satisfy additional specific requirements before they can be fully approved and listed on the Hong Kong Stock Exchange (HKEX).

These conditions mainly involve administrative steps such as:

  • fee payments
  • submission of necessary documents
  • obtaining formal listing approval from HKEX

The SFC typically grants such conditional letters when an ETF application aligns well with its criteria, but additional steps are required to secure full authorization.

Consequently, the ETF providers have been given the nod to start preparing for the next phases, which include applying for listing on HKEX. However, the definitive approval to launch these ETFs in Hong Kong remains on hold until all stipulated conditions are met. Thus, while the Bitcoin and Ethereum ETF applications have successfully passed an initial assessment, a few more hurdles must be cleared before they can officially commence operations in the city.

When Will Ethereum ETFs Be Approved in the U.S.?

Currently, while Ethereum futures ETFs are available for trading in the U.S., the market is still awaiting the launch of spot Ethereum ETFs.

There is a general agreement among financial experts that spot Ethereum ETFs will eventually receive U.S. approval, though the exact timeline is still unclear. Analysts are divided on when the Securities and Exchange Commission (SEC) might give the green light; some anticipate a decision by the end of 2024, while others are less optimistic about an approval as early as May 2024, coinciding with the SEC’s expected rulings on several pending applications.

The uncertainty in the approval timeline is exacerbated by unresolved regulatory questions concerning whether ether should be classified as a security or a commodity. Additionally, other technical details in the ETF proposals could also contribute to potential delays in SEC approval.

Hong Kong Bitcoin and Ethereum ETFs Enhance Virtual Asset Investment Landscape

This development is a key advancement for Hong Kong’s cryptocurrency sector. It positions the city as a significant center for virtual asset investment. The recent approval of Bitcoin ETFs has already expanded investment opportunities. Now, Ethereum ETFs will further diversify offerings in the financial market.

The innovative Ethereum ETFs allow for an “in-kind” subscription. Investors can use Ether directly to buy into these funds, differing from the cash-create model seen in the U.S. Bitcoin ETFs.

These new investment vehicles are anticipated to draw more institutional investors. They are seen as bolstering Hong Kong’s role as an international finance hub and a leader in virtual assets.