Hong Kong is getting ready to release its very first Bitcoin Spot ETF — this move comes a month after Hong Kong opened up Spot ETF access for the public and larger institutions.
We also have seen US judges pushing for Grayscale’s Spot Bitcoin ETF conversion as this technological arms race heats up and trillions of dollars is waiting to get in.
Spot crypto ETFs in the city-state were actually available since January this year but were only restricted to institutional investors or professional investors with portfolios of at least 8 million HKD which is equivalent to $1 million USD.
Read: 4 Key Narratives That Will Pump The Price Of Bitcoin
There Is A Catch Though
Hong Kong’s ambition has always been to be Asia’s crypto capital and is competing with other Asian countries for the top spot.
Hong Kong’s securities regulator, the Securities & Futures Commission (SFC), says that they still want to avoid overseas virtual asset products because it considers them complex and risky.
The SFC added that they are open to allowing retail investors to access spot crypto ETFs, but only if the risks are properly managed — the regulator is currently evaluating a number of proposals from asset managers and other financial institutions.
Read: Hong Kong’s Crypto Hub Dreams Cast In Doubt By A Crypto Pioneer
Didn’t China Ban Crypto Before?
As you may not be aware of, Hong Kong is controlled by China and in the past have banned crypto and Bitcoin mining. Many speculations from the crypto community led to believe that it was all smoke and mirrors kind of tactic and now they are all in on crypto.
Game theory is playing out — they know the US is about to approve a Bitcoin spot ETF and they see the capital that is flowing to different parts of the world such as in the Middle East. There is tons of capital coming in and a lot of building happening in the crypto industry right now.
Read: China’s Strategic Moves In Blockchain: A Quest For Dominance In The Future of Finance
Final Thoughts
Hong Kong’s consideration of spot ETFs is likely motivated by the fact that the US does not have one yet with all the uncertainties they are currently facing. China has a history of competing with the US in the financial sector and it may see the approval of spot crypto ETFs as a way to gain an advantage and not miss out.
But take note the SFC is still in the early stages of considering whether to approve these spot crypto ETFs — it is always possible that the regulator will decide not to allow them or that it will impose strict conditions on their launch. So investors should therefore not expect spot crypto ETFs to be available anytime soon.