Hong Kong Could be Next Bitcoin ETF Hub, Analysts Say

As the anticipation for a Bitcoin ETF approval in the U.S continues to grow, experts are eyeing Hong Kong as the next big destination for Bitcoin ETFs.

This consideration is coming because of Hong Kong’s crypto-friendly stance, which started in November 2022 following the release of a crypto rule book. Analysts anticipate that the city may therefore become one of the leaders in Bitcoin ETFs after the U.S approves its own ETFs.

Speaking with crypto nes outlet The Block, chairman of web3 investor Animoca Brands Yat Siu the encouraging stance of Hong Kong’s Securities and Futures Commission toward digital assets sets a decent stage for potential spot bitcoin ETFs.

“If you look at what the SFC had said about I think a month ago, it says that it was open to widen access to digital assets,” Siu said. “And frankly, Bitcoin spot ETF is, I would say, relatively uncontroversial at the end of the day.”

“I would imagine that [Hong Kong] would follow, especially because the U.S. has already done a lot of the work,” Siu added, referring to the several filings for Bitcoin spot ETFs in the U.S, adding that Hong Kong will have a lot to make reference to.

Why Hong Kong

Hong Kong started opening its doors to crypto startups in 2022 ending when it rolled out rules for establishing regulated crypto companies. As a result, many crypto startups have rushed to establish in the city.

This is not the case with mainland China where crypto trading remains banned. Currently, the leading hindrance to the growth of the crypto industry remains lack of regulatory clarity. 

Hong Kong officially started licensing crypto startups in June, allowing licensed exchanges to offer retail trading services. Also, Hong Kong’s SFC is already considering approvals for Bitcoin ETFs as it is open to “proposals using innovative technology that boosts efficiency and customer experience,” the agency’s chief executive officer Julia Leung said in November. 

Already, there are several futures-based Bitcoin ETFS including Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF. This suggests that the SFC could be getting ready to approve spot ETFs as well. 

Head of Sales of APAC at web3 infrastructure firm Blockdaemon, Glenn Woo said in an interview with The Block that the SFC clearly shows interest in a spot Bitcoin ETF.

“There is appetite there,” said Woo. “I’m not sure whether it’s going to launch next year or the year after, but the appetite will grow after the U.S. approves their ETF first,” he added.

Asia Taking the Lead

While there has been a lot going on in the west with many companies in the U.S adopting crypto or increasing their positions in the assets, the interest may be shifting from the west to Asia going forward.

“The last cycle had significant participation driven from the West, whether it was Saylor stuffing BTC into Microstrategy’s balance sheet or PayPal slinging shitcoins to millions of retail,” Jack Tan, co-founder of WOO exchange, said. “However, we believe the next cycle will be driven from the East, with a resurgence of retail participation led by major geographies like [South] Korea, Hong Kong and Japan.”

Indeed, Hong Kong has already set the precedence and more Asian jurisdictions are bound to follow as they observe that the industry is booming in the city.

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