Hong Kong, once resistant to cryptocurrencies, is now positioning itself as an early contender in Asia for the introduction of spot Bitcoin exchange-traded funds (ETFs). Following the approval of such ETFs by the U.S. Securities and Exchange Commission (SEC), Harvest Hong Kong, a major Chinese fund manager, has officially submitted an application for a spot Bitcoin ETF to the Hong Kong Securities and Futures Commission. Harvest aims to launch the ETF after the Lunar New Year holiday on February 10, becoming the first company to apply for such an ETF in Hong Kong. This move follows the SEC’s approval of nearly a dozen spot BTC ETFs in the U.S. on January 10.

Hong Kong’s regulators are anticipated to follow a similar approach to the SEC, approving multiple spot ETF applications to ensure fair market access. While Harvest is the first to apply, at least 10 other fund companies have signaled interest in launching spot crypto ETFs in the city in 2024. Venture Smart Financial Holdings, headquartered in Hong Kong, has also expressed plans to file a spot market Bitcoin ETF with hopes of commencing trading in the first quarter of this year. There are speculations that Hong Kong spot ETFs might differ operationally from those in the U.S., potentially allowing Bitcoin redemptions in kind in addition to cash creation.

The interest in spot market BTC ETFs comes as there is a growing focus on stablecoins. Entities like Venture Smart Financial, Harvest, VSFG, and RD Technologies are reportedly in discussions about potential stablecoin trials with the Hong Kong Monetary Authority (HKMA). These trials would assess use cases ahead of forthcoming stablecoin regulations in Hong Kong, with the HKMA proposing a licensing regime for fiat-backed stablecoins in a December consultation paper. The proposed stablecoins are positioned as intermediaries between traditional finance and crypto markets.