Hong Kong Approves Crypto ETFs
The Hong Kong stock market approves crypto-based ETFs according to the government agency that regulates the matter. At this point, it approves ETFs based on Bitcoin and Ethereum, and the trading can start in a month.
It’s a huge move for the Hong Kong market that’s just following along with the trends in the US Bitcoin market and the SEC that approved ETFs in the US. There’s already an impact on the markets, even though trading won’t be available just yet, and the price of both BTC and ETH is rising.
The Regulatory Body
Hong Kong’s Securities and Futures Commission (SFC) is the regulatory body that approved the trading of crypto-based ETFs in Hong Kong. It’s the equivalent of the US Securities and Exchanges Commission, which has done the same in the US. SFC didn’t officially issue any statement about ETFs being approved.
Interestingly enough, the news about ETFs being approved came unofficially from the companies that spot them. This was announced on the Chinese social media platform WeChat by the asset managers themselves. The media that tried to reach out to the SFC haven’t gotten a response yet.
China Asset Management
China Asset Management is one of the companies that has been spotting new ETFs, particularly the one tied to Bitcoin. It plans to issue spot bitcoin and ether ETFs in collaboration with OSL and BOCI International. OSL said it will act as the “first virtual asset trading and sub-custodian partner” of China Asset Management for the upcoming ETFs.
The company was established in 1998, and it entered the Western markets in 2011. In 2017, ChinaAMC became the first full-service Chinese asset manager to sign up for the United Nations-supported Principles for Responsible Investment (PRI). It’s one of the largest funds in China, and it manages over $261 billion.
“The introduction of the virtual asset spot ETFs not only provides investors with new asset allocation opportunities but also reinforces Hong Kong’s status as an international financial center and a hub for virtual assets,” Bosera Asset Management (International) said in its statement.
Harvest Global Investment
Harvest Global Investment spots the ETH ETFs. The two ETFs will be issued in collaboration with OSL, which could effectively address issues such as excessively high margin requirements. It’s a privately owned asset management fund created in 1999.
Harvest shareholders include China Credit Trust Co., Ltd., Lixin Investment Co., Ltd., and Deutsche Bank AG. In 2012, HFM became the first China-based asset manager to create a joint venture with a US partner, forming Harvest USA. Assets under management are worth about $230 billion.
In this collaboration, OSL leverages its robust infrastructure to provide a secure trading environment essential for the ETF’s operation, managing the underlying assets with precision and reliability,” OSL said in a statement.
Why Does It Matters?
The introduction of ETFs is one of the most important events in the development of cryptocurrencies. It’s a unique new way to invest in crypto and one that brings together traditional financial institutions such as stock markets and cryptocurrencies.
ETFs work similarly to any mutual fund. The value of the ETF is tied to the value of cryptocurrency. That way, when the investors buy ETFs, their value grows or shrinks as Bitcoin and ETH do. For a while now, those who make investments in the stock market have been looking for ways to invest in crypto without having to buy the coins directly. This is the way to do it while using all the benefits that come with the stock market.
International Markets
Cryptocurrencies are already a global product and are used in many different industries. For instance, those who explore best Bitcoin gambling sites can find establishments based across the world and access them regardless of their country’s policy on online gambling.
Hong Kong is looking for ways to become a hub for this market in Asia. It’s also an important contrast to mainland China, which has a strict policy towards crypto but still doesn’t see its potential. It also hasn’t made any ventures into crypto ETFs, which are the latest developments in the world of crypto investing.
Changing Landscape in the West
The introduction of new markets for crypto ETFs in Asia is also important because of the latest regulatory landscape that’s currently being formed in the West. There’s a wide adoption of crypto in the US, Canada, and Europe. With the wide adoption comes the changing landscape of rules and regulations.
The EU has recently introduced a comprehensive set of laws that will govern this area, and many believe that the US will follow along. Many cryptocurrencies, exchanges, and players involved in the industry in other ways are, therefore, moving on to Asia as the next important market.
How the News Affected the Markets
In the long run, the markets are doing great, and the value of cryptocurrencies is on the rise. This has especially been true in the last year as the value of cryptocurrencies steadily grew for months with wider adoption and the introduction of ETFs.
In the last couple of days, however, Bitcoin was down, and it somewhat spooked the investors. This is also happening while the investors are waiting for the halving, which is the biggest event for the Bitcoin ecosystem and one that always affects the markets.
Bitcoin (BTC) has risen 2.8% over 24 hours, trading above $66,500, and ether (ETH) has advanced to $3,240, according to CoinDesk Indices data. This latest change is probably the result of the introduction of the ETF.
Broader State of the Market
Ether (ETH), the second largest cryptocurrency by market value, hovered just above the $3,100 mark in early afternoon U.S. hours on Monday, struggling to retain gains made since the crypto market’s panicky selloff on Saturday.
While ahead 4% over the past 24 hours, ETH is lower by about 4% since rising to nearly $3,300 earlier.
Downside pressure in Bitcoin (BTC) has resumed as well, with that crypto now modestly lower over the past 24 hours to $64,200 after earlier Monday nearly reaching $67,000.
The index of the 20 largest cryptocurrencies is ahead 0.68% over the past 24 hours.
Notable Events to Come
ETF investors are carefully following a few important events that will especially affect the value of Bitcoin and, therefore, its ETF, as well as all other cryptocurrencies. These include the halving, which is the standard procedure of reducing the number of crypto chains by half to avoid inflation.
There’s also a growing focus on global events, including wars and sanctions that may cause a dip in the crypto value, and investors usually take advantage of those by “buying the dip.”
Conclusion
The Hong Kong stock market has allowed ETF trading for Bitcoin and Ethereum ETFs. It has done so after the US stock markets. It’s an important move when it comes to trading crypto with the help of traditional financial players, such as the stock market itself.
The news of this development still hasn’t come from the agency that’s actually responsible for issuing the licenses but from the asset management funds that will spot the ETFs. The markets have already reacted to the news with a small surge in ETH and Bitcoin value.
