Harvest Fund’s Spot Bitcoin ETF Application: A Game-Changer for Hong Kong’s Crypto Landscape

Harvest Fund’s Spot Bitcoin ETF Application: A Game-Changer for Hong Kong’s Crypto Landscape

In a groundbreaking move that could reshape Hong Kong’s financial landscape, Harvest Fund Management has officially submitted the first-ever application for a spot Bitcoin ETF to the Hong Kong Securities and Futures Commission (SFC) on January 26. This development comes hot on the heels of the recent approval of similar ETFs by the US Securities and Exchange Commission (SEC) and marks a pivotal moment for the city’s growing interest in cryptocurrencies.

The SFC has expressed a keen interest in expediting the approval process for Hong Kong’s inaugural spot Bitcoin ETF. Plans are underway to list it on the Hong Kong Stock Exchange shortly after the Chinese New Year in February. This rapid development could set the stage for multiple institutions to enter the market, aligning with the US model where ETF sizes grew rapidly under the influence of key financial players.

While Harvest Fund is the first to apply, several existing crypto companies that launched futures-based ETFs in Hong Kong are expected to follow suit. Samsung Asset Management, known for launching the Samsung Bitcoin Futures ETF in 2023, has expressed openness to exploring a spot ETF. Other financial firms such as Venture Smart Financial Holdings have shown interest in applying for a spot crypto ETF too.

Moreover, Harvest Fund’s ETF might distinguish itself from its US counterparts. There are indications that it could allow not only traditional fiat currency subscriptions but also direct Bitcoin subscriptions. This novel approach could provide investors in the region with a distinctive and flexible investment option.

Implications for Hong Kong’s Financial Landscape

The recent developments in Hong Kong are not surprising given the city’s crypto-ready stance. Hong Kong has been a frontrunner in embracing digital assets, evidenced by its eight-month-old rulebook about digital assets, aimed at protecting investors while encouraging innovation. This forward-thinking approach has positioned Hong Kong as an attractive destination for crypto-related ventures.

The introduction of a spot Bitcoin ETF is bound to have a profound impact on Hong Kong’s financial sector, providing investors with an accessible and regulated gateway to the world of cryptocurrencies. It aligns with the city’s goal to establish itself as a digital-asset hub, fostering innovation while ensuring investor protection.

Growing Acceptance of Crypto in Hong Kong

The submission by Harvest Fund signals a remarkable shift in the perception and acceptance of cryptocurrencies within mainstream financial markets. However, this acceptance is not limited to ETFs. The Hong Kong Monetary Authority (HKMA) has been in discussions with companies like Harvest Global Investments, RD Technologies, and Venture Smart Financial Holdings regarding stablecoin trials within regulatory sandboxes. These developments underline Hong Kong’s commitment to fostering innovation and facilitating the integration of digital assets into its financial ecosystem.

Impact on Investment Opportunities

The potential approval of Harvest Fund’s ETF could open the floodgates for a diverse range of investors, especially those who are traditionally cautious due to the perceived complexity and risks associated with the crypto market. The potential approval aligns with a global trend where institutional investors are increasingly exploring cryptocurrency as an alternative investment, particularly in the wake of traditional market challenges.

Anndy Lian, an intergovernmental blockchain advisor, emphasizes the global context, pointing out that the Chinese stock market had a lackluster performance in 2023. The increasing interest in crypto alternatives is viewed as a positive development for the crypto industry. Harvest Fund, ranking as China’s sixth-largest public fund manager, filing for a Bitcoin ETF could pave the way for more Chinese capital to flow into the crypto market.

Global Impacts

Global Crypto Adoption

The developments of the crypto landscape in Hong Kong are likely to influence other nations in the integration of crypto into traditional financial systems. The approval of a spot Bitcoin ETF in Hong Kong could encourage regulatory bodies in other countries to review their own stance about cryptocurrencies and provide a clearer regulatory framework for digital assets. Hong Kong’s regulatory approach to the spot Bitcoin ETF approval may serve as a blueprint for other regions. Regulators in various jurisdictions are likely to closely observe how Hong Kong balances investor protection with fostering innovation. The approval could set a standard for regulatory frameworks, providing clarity and encouraging other countries to follow suit.

Global Investor Confidence

Furthermore, the potential approval of a spot Bitcoin ETF in Hong Kong is poised to attract investors, especially institutional ones, on a global scale. Hong Kong’s embrace of a spot Bitcoin ETF could instill a sense of confidence in investors worldwide. The move signifies a departure from the skepticism that has surrounded cryptocurrencies in some traditional financial circles. As confidence grows, more investors, both retail and institutional, may be inclined to allocate a portion of their portfolios to digital assets. That’s why investors, both in Asia and beyond, are closely monitoring Hong Kong’s stance on cryptocurrency investment.

Increased Market Capitalization of Cryptocurrencies

It’s also worth mentioning that the approval of a spot Bitcoin ETF in Hong Kong could contribute significantly to the overall market capitalization of cryptocurrencies. As institutional investors gain easier access to Bitcoin through ETFs, a surge in demand is likely, driving up the price of the digital asset. This increased valuation directly contributes to the broader market capitalization of cryptocurrencies.

 

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

Source: https://www.bitget.com/en-GB/academy/harvest-fund-filed-the-first-spot-btc-etf-in-hong-kong

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Spot Bitcoin ETF Application Marks New Era For Hong Kong: Will It Unlock A Flood Of Chinese Investment?

Spot Bitcoin ETF Application Marks New Era For Hong Kong: Will It Unlock A Flood Of Chinese Investment?

In a significant development for the cryptocurrency market in Hong Kong, Harvest Fund has officially applied to the first-ever Bitcoin (CRYPTO: BTC) spot Exchange Traded Fund (ETF) with the Hong Kong Securities and Futures Commission (SFC).

Why It Matters:

The submission of this application by Harvest Fund is a clear indicator of the growing interest and acceptance of cryptocurrencies in mainstream financial markets.

This initiative follows closely on the heels of the U.S. Securities and Exchange Commission’s approval of the first batch of Bitcoin spot ETFs just two weeks prior, a decision that has seemingly influenced the SFC’s accelerated pace in this domain.

The potential approval of this ETF in Hong Kong could significantly broaden investment opportunities and attract a wider range of investors, including family offices that have previously been hesitant to directly engage in the Bitcoin market due to its complexity and perceived risks.

According to Anndy Lian, an intergovernmental blockchain advisor, the Chinese stock market was one of the worst performers globally in 2023, funds looking for crypto alternatives are a big plus for the crypto industry.

Read Also: Unlocking Crypto Riches: Crypto Expert Shares Guide How To Value Tokens

What’s Next:

The SFC is reportedly eager to expedite the approval process for Hong Kong’s first spot Bitcoin ETF, with plans to list it on the Hong Kong Stock Exchange shortly after the Chinese New Year.

This development could pave the way for multiple institutions to enter the market, mirroring the approach taken in the U.S., where firms like GrayscaleBlackRock Inc. (NYSE:BLK), and Fidelity rapidly grew their ETFs’ sizes.

 

Source: https://markets.businessinsider.com/news/etf/spot-bitcoin-etf-application-marks-new-era-for-hong-kong-will-it-unlock-a-flood-of-chinese-investment-1033006451

https://www.benzinga.com/markets/asia/24/01/36823522/spot-bitcoin-etf-application-marks-new-era-for-hong-kong-will-it-unlock-a-flood-of-chinese-investmen

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Crypto ETFs are exchange-traded funds that track the performance of one or more cryptocurrencies, such as Bitcoin and Ether. Crypto ETFs allow investors to gain exposure to the crypto market without having to buy, store, or manage the underlying assets themselves. Crypto ETFs can also offer more liquidity, transparency, and diversification than direct crypto investments.

There is a lot of hype about crypto ETFs in the West, especially in the US, where many fund managers have been applying for the approval of the Securities and Exchange Commission (SEC) to launch spot crypto ETFs, which would hold the actual cryptocurrencies in custody. However, the SEC has been reluctant to approve these ETFs, citing concerns over market manipulation, investor protection, and regulatory compliance. So far, the SEC has only approved crypto ETFs that invest in Bitcoin futures contracts, which are derivatives that track the price of Bitcoin but do not involve the physical delivery of the asset.

The approval of spot crypto ETFs in the US would be a major milestone for the crypto industry, as it would open the door for more mainstream adoption and institutional participation. It would also create more competition and innovation in the crypto space, as well as more regulatory clarity and oversight. Many crypto enthusiasts and investors are eagerly awaiting the SEC’s decision, which could have a significant impact on the crypto market sentiment and price movements.

Hong Kong, one of the world’s top financial hubs, is thinking about allowing spot crypto ETFs, which would make it the first major place in Asia to do so, and possibly make it a regional center for digital asset activities. According to a recent report by Bloomberg, the Hong Kong Securities and Futures Commission (SFC) is in talks with potential issuers of crypto ETFs and is considering whether to grant them licenses under its existing framework.

What are spot crypto ETFs and why do they matter?

An ETF is a kind of fund that follows the performance of an asset or a group of assets, and can be traded on a stock exchange like a normal stock. A spot crypto ETF is an ETF that directly invests in cryptocurrencies, such as Bitcoin or Ether, and shows their spot prices, which are the current market prices of the tokens. A spot crypto ETF would let investors get exposure to the crypto market without having to buy, store, or manage the tokens themselves, which can be hard, expensive, and risky. A spot crypto ETF would also give more liquidity, transparency, and diversification than buying individual tokens, and would be under the regulatory control and investor protection of the stock exchange and the securities regulator.

Spot crypto ETFs are seen as a way of making cryptocurrencies more popular and accessible to a bigger range of investors, especially institutional and retail investors who may be hesitant or unable to invest in the crypto market directly. Spot crypto ETFs could also increase the demand and adoption of cryptocurrencies, and improve their legitimacy and credibility as an alternative asset class. Moreover, spot crypto ETFs could improve the innovation and competitiveness of the financial sector, and attract more talent and capital to the crypto ecosystem.

Challenges and risks of spot crypto ETFs

However, spot crypto ETFs also have challenges and risks, as the crypto market is still mostly unregulated, unpredictable, and vulnerable to various threats. Some of the main challenges and risks are:

Regulatory uncertainty: The crypto market is subject to different and often conflicting regulations across different places, and some countries have banned or limited the use of cryptocurrencies altogether. This creates legal and compliance challenges for spot crypto ETFs, as they may have to deal with multiple and changing regulatory regimes, and face possible sanctions or restrictions from some authorities. Moreover, the crypto market is constantly changing and innovating, and new kinds of tokens and platforms emerge often, which may pose new regulatory issues and challenges that are not yet covered or solved by the existing frameworks.

Market volatility: The crypto market is very volatile, as the prices of cryptocurrencies can change a lot and unexpectedly due to various factors, such as supply and demand, market mood, news and events, technical issues, and speculation. This makes the crypto market very risky and speculative, and exposes spot crypto ETFs to big price changes and potential losses. For example, Bitcoin, the biggest and most famous cryptocurrency, reached a record high of over $67,567 in November 2021, but recently it went below $20,000 in early 2023, losing more than half of its value. Such extreme volatility can hurt the confidence and trust of investors, and stop them from investing in spot crypto ETFs.

Security and operational risks: The crypto market is also exposed to various security and operational risks, such as hacking, fraud, theft, cyberattacks, human mistakes, technical problems, and system failures. These risks can affect the integrity and functionality of the crypto platforms, wallets, and transactions, and result in the loss or theft of cryptocurrencies or user data. For instance, in 2023, the JPEX crypto exchange in Hong Kong was allegedly involved in a HK$1.6 billion ($204 million) fraud that affected more than 2,600 investors, who lost their money and personal information. Such incidents can harm the reputation and credibility of the crypto market, and expose spot crypto ETFs to legal and financial responsibilities.

Hong Kong’s position on spot crypto ETFs

Hong Kong is currently one of the few places in the world that allows futures-based crypto ETFs, which are ETFs that invest in contracts that bet on the future prices of cryptocurrencies, rather than the tokens themselves. However, the demand and performance of these ETFs have been low, as they are more complex and costly than spot crypto ETFs, and may not show the actual prices of the tokens. As of November 2023, there are only three futures-based crypto ETFs listed on the Hong Kong Stock Exchange (HKEX), with a combined market value of about $65 million.

In contrast, Hong Kong does not allow spot crypto ETFs, as the Securities and Futures Commission (SFC), the city’s securities regulator, has not authorized any such products for public offering. However, this may change soon, as the SFC’s new chief executive officer, Julia Leung, said in an interview with Bloomberg on November 5, 2023, that the SFC is considering allowing spot crypto ETFs, as long as they meet the regulatory requirements and address the new risks. Leung said that the SFC is open to proposals that use innovative technology to boost efficiency and customer experience, and that the SFC is happy to give it a try as long as the risks are managed.

Leung’s statement shows that Hong Kong is taking a more active and progressive approach to the crypto market, and is trying to create an ecosystem for digital assets that can attract more investors and businesses. This is consistent with Hong Kong’s recent efforts to establish a complete and strong regulatory framework for virtual assets, which covers crypto exchanges, stablecoins, and tokenization. The SFC launched the framework in June 2023, with the goal of improving the transparency, accountability, and security of the crypto market, while promoting its innovation and development.

Two sides of the coin

As a practitioner who has been following the crypto market for several years, I have a mixed and complex view on Hong Kong’s plans to greenlight spot crypto ETFs. On one hand, I think that this is a smart and forward-looking move that could make Hong Kong a leading and competitive digital asset center in Asia, and maybe the world. Spot crypto ETFs bring benefits and opportunities for the financial sector, the crypto ecosystem, and the investors, as they could provide more access, convenience, diversity, and innovation to the crypto market, and enhance its growth and adoption. I also think that Hong Kong has the potential and the ability to become a successful and reputable spot crypto ETF market, as it has a strong and mature financial infrastructure, a sophisticated and experienced regulatory system, and a lively and dynamic crypto community.

On the other hand, this is a risky and difficult move that could expose Hong Kong to a lot of uncertainties and threats, as the crypto market is still mostly unregulated, unstable, and insecure. Spot crypto ETFs present challenges and risks for regulators, issuers, and investors, as they could face legal and compliance difficulties, market volatility and losses, and security and operational breaches. Hong Kong has to be careful and sensible in its authorization and supervision of spot crypto ETFs, as it has to balance the interests and expectations of different stakeholders, and ensure the protection and education of the investors, especially the retail investors who may not be fully aware or informed of the risks and complexities of the crypto market.

Many of my friends think that Hong Kong’s plans to greenlight spot crypto ETFs are a double-edged sword that could bring both rewards and risks, and that Hong Kong has to consider the advantages and disadvantages carefully and responsibly, and adopt a balanced and adaptive approach that can foster the innovation and development of the crypto market, while reducing its challenges and risks.

But in my personal opinion, Hong Kong’s potential approval of spot crypto ETFs is a good decision, as it would benefit both the investors and the industry in the long run. The advantages outweigh the disadvantages, as the risks and challenges can be mitigated by proper regulation, education, and innovation.

The next steps in policy and industry practice should focus on creating a robust and adaptive regulatory framework for spot crypto ETFs in Hong Kong. It’s essential to strike a balance between fostering innovation and safeguarding investors, particularly the retail sector. This regulatory framework should address challenges related to regulatory uncertainty, market volatility, and security risks, promoting transparency and accountability. It should provide comprehensive investor education to ensure a better-informed market. In light of the Western enthusiasm for crypto ETFs, Hong Kong’s success in this endeavor could set a benchmark for other Asian countries, facilitating broader adoption and promoting responsible growth in the crypto space.

Hong Kong has the potential to become a leader and a model in the crypto space, as it has a strong and mature financial system, a supportive and proactive government, and a vibrant and diverse crypto community. Hong Kong’s move could also influence and inspire other Asian countries and regions to follow suit and embrace the crypto revolution.

 

 

Source: https://www.blockhead.co/2023/11/14/hong-kongs-plan-to-greenlight-spot-crypto-etfs-smart-move-or-foolish-gamble-gs-plans-to-greenlight-spot-crypto-etfs-a-smart-move-or-a-foolish-gamble/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j