A Hong Kong-based financial services company, Venture Smart Financial Holdings Ltd. (VSFG), announced its intention to launch the first spot Bitcoin exchange-traded fund (ETF) in Asia, according to a Bloomberg report.
The company said it plans to file an application with the Securities and Futures Commission (SFC) of Hong Kong, the region’s financial regulator, to launch the spot Bitcoin ETF. This follows the release of guidelines by the SFC last Dec for the approval of spot crypto funds in the region.
Brian Chan, the group head of investment and product at VSFG, said that launching a spot Bitcoin ETF in Hong Kong has a lot of market potential. He stated, “Our goal is $500 million in assets under management by the end of this year.”
The company’s move reflects the growing interest in spot Bitcoin ETFs among institutional investors, especially after the US Securities and Exchange Commission (SEC) approved several such funds earlier this month. Spot Bitcoin ETFs track the price of the underlying asset directly, unlike futures-based ETFs that track the price of Bitcoin futures contracts.
Investor’s view Spot Bitcoin ETFs as a more efficient and cost-effective means of gaining exposure to the cryptocurrency market. These ETFs eliminate the necessity for investors to grapple with the complexities and risks associated with storing and managing digital assets. They also offer more transparency and liquidity than futures-based ETFs, which may suffer from tracking errors and premium discounts.
The approval of spot Bitcoin ETFs in the US boosted the price of Bitcoin, which reached new highs of over $60,000. However, since then, the cryptocurrency has been on a downward trend, as investors await the launch and performance of the new funds.
Hong Kong: Futures Vs Spot Bitcoin ETF
In Hong Kong, only futures-based crypto ETFs are currently permitted. There are three such funds listed in the region: CSOP Bitcoin Futures, CSOP Ether Futures, and Samsung Bitcoin Futures. These funds have attracted over $50 million in assets since their inception.
However, VSFG is not the only firm looking to enter the spot crypto fund space in Hong Kong. Samsung Asset Management, one of the issuers of futures-based ETFs, said it would not “eliminate the possibility of exploring to launch a spot ETF.”
Similarly, Aegis Custody, a digital asset custodian, is in talks with four asset managers on the listing of spot cryptocurrency products in Hong Kong, according to the company’s CEO, Serra Wei. Also, Wei stated that if the funds receive approval, they might need to impose higher fees than futures-based ETFs, owing to the regulatory requirements in Hong Kong.
The SFC did not comment on the matter, except for referring to the previously issued guidelines. However, the approval process for spot ETFs in Hong Kong could take longer than usual, as the regulator may have to conduct more due diligence and scrutiny on the applicants.
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