Hong Kong’s bitcoin, ether ETFs seen as attractive to Asian buyers, but ‘child’s play’ compared with scale of US market

The Asian finance hub’s upcoming spot cryptocurrency ETFs could attract regional investors who do not want to bother with US accounts and tax forms, experts say

Hong Kong is the first major financial market to offer spot ether ETFs, but some were dismissive, noting the city’s small ETF market relative to the US

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An advertisement for bitcoin displayed on a tram in Hong Kong on May 12, 2021. Photo: AP Photo

Published: 6:30pm, 16 Apr 2024

Hong Kong’s upcoming exchange-traded funds (ETF) that invest directly into cryptocurrencies could be attractive to many Asian investors, industry insiders say, but demand may still be a trickle compared with that in the US.

Hong Kong’s Securities and Futures Commission (SFC) on Monday gave the green light to multiple mainland Chinese fund houses and local virtual asset firms to move forward with their applications to offer ETFs that invest directly in bitcoin and ether, the world’s two largest crypto tokens.

The move, which came only a few months after Hong Kong regulators announced plans to allow spot crypto ETFs, was hailed as a major milestone in the city’s pursuit to become a global virtual asset hub. It also gave the market a rare lead over the US, which has yet to make a decision on allowing spot ether ETFs.

“We can expect a healthy level of interest, especially with other Asian jurisdictions staying away from domestic spot bitcoin ETF issuance for now,” said Angela Ang, senior policy adviser at blockchain analytics firm TRM Labs.

Spot bitcoin ETFs in the US, which were approved in January, are also available worldwide, but many Asian investors may prefer to avoid the hurdle of opening a US investment account and paying the country’s capital gains tax, said Michael Wong, a partner at the law firm Dechert LLP in Hong Kong.

“It’s just more convenient for Hong Kong investors or probably Asian investors generally, who don’t want to open a US brokerage account,” Wong said.