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A key player serving two leading fund managers as a sub-custodian and infrastructure service provider, OSL, announced that it expects the approval and launch of spot Bitcoin exchange-traded funds (ETFs) in Hong Kong by the end of April without any regulatory hurdles. According to a confirmation given to The Block by OSL, asset management companies in Hong Kong, including units of China Asset Management (ChinaAMC) and Harvest Global, are preparing to launch spot Bitcoin ETFs this month, marking a significant advancement for the cryptocurrency market.
ETFs Could Arrive by End of April
Patrick Pan, Chairman and CEO of OSL, indicated that the progress made so far points to the launch of a spot Bitcoin ETF in Hong Kong by the end of April, followed by a spot Ethereum ETF. Despite ongoing efforts by all stakeholders to expedite the process, the exact launch dates are not yet certain. However, Pan expressed optimism about the final regulatory approvals, which he views as very important steps towards the launch of spot cryptocurrency ETFs.
In a statement to a Chinese-language crypto news organization, Foresight News, Pan mentioned that spot Bitcoin ETFs could be offered to investors by the end of April. This statement followed the principle approval given by the Hong Kong Securities and Futures Commission (SFC) on April 15 to several asset management companies, including ChinaAMC, Harvest, Bosera, and HashKey, to offer spot Bitcoin and Ethereum ETFs. Notably, OSL serves as the sub-custodian and infrastructure service provider for the ETFs issued by ChinaAMC and Harvest.
Katie He, Product and Strategy Manager at ChinaAMC, anticipates high demand for the upcoming spot cryptocurrency ETFs among Hong Kong-based investors looking for diversified investment options in the crypto market. She emphasized the importance of making spot products more accessible to a broader audience, highlighting the limitations faced by non-professional investors in accessing U.S.-listed spot Bitcoin ETFs.
A distinctive feature of the spot cryptocurrency ETFs expected to be launched in Hong Kong is the in-kind feature that facilitates the seamless conversion of spot Bitcoin into regulated spot Bitcoin ETFs. This innovative approach offers convenience and risk reduction for investors, marking a significant distinction from traditional individual fund structures.
Expectations High, but Bloomberg ETF Analyst Cautions
Although expectations are high for the launch of spot cryptocurrency ETFs in Hong Kong, Bloomberg Senior ETF Analyst Eric Balchunas tempered expectations with a modest entry prediction of $500 million. Balchunas highlighted the relatively small scale of the Hong Kong ETF market and the restrictions on access for the local Chinese population to these products.
Amid discussions about the potential participation of Mainland Chinese investors through the Southbound Stock Connect program, Gary Tiu, OSL Executive Director and Head of Regulatory Affairs, noted that cryptocurrency ETFs are currently not included in the program’s eligible securities list. However, Tiu emphasized the evolving dynamics of cryptocurrency regulation and market integration, acknowledging that expectations for such inclusion are well-founded.
