Making Crypto History: Hong Kong Poised to Approve Bitcoin ETF

There is anticipation that a Bitcoin exchange-traded fund (ETF) will soon be approved in Hong Kong.

According to sources in Hong Kong, the Securities and Futures Commission (SFC) is expected to approve the Bitcoin ETF by the 15th.

If Hong Kong authorities approve, it will be the second approval after the U.S. Securities and Exchange Commission (SEC) and the first case of an ETF approval in Asia.

A Bitcoin ETF is an investment product that allows asset managers and other institutional investors to hold Bitcoin as a base asset.

When investing in a Bitcoin ETF, instead of directly buying Bitcoin, you invest in a fund that tracks its price. In other words, it is an indirect way to invest in Bitcoin.

The U.S. approved a Bitcoin ETF last January. After the approval, Bitcoin, backed by institutional investors, broke through an all-time high of $73,000 mid-last month.

So, why is Hong Kong poised for approval?

A source explained, “Hong Kong is doing its utmost to regain its ‘global financial hub’ reputation, which was lost due to the COVID-19 pandemic, China’s economic slowdown, and U.S.-China conflicts.”

As Chinese investors cannot find investment opportunities due to the local real estate market downturn and stock market slump, Hong Kong is pushing for approval to attract these investors.

A domestic analyst explained, “Although there are many restrictions for Chinese residents to invest in Hong Kong financial products if even a portion of the funds flows in, the market size could proliferate quickly.”

There seems to be a growing movement to allow Bitcoin ETFs in South Korea.

Previously, the leading opposition party, the Democratic Party, announced an election pledge to revise the Capital Market Act to allow Bitcoin ETFs.

Following the 22nd general election held on the 10th, the Democratic Party won 175 seats, achieving a majority. As a result, regulations for introducing the product are expected to be relaxed.

However, the Financial Services Commission has previously interpreted that a Bitcoin ETF could violate the Capital Market Act, so the amendment is predicted to be challenging.

As of 6:28 PM on the 11th, the price of Bitcoin is 189 million won ($159,500). This is a 0.29% increase per 1BTC from 24 hours ago.

The price momentarily dropped by about 3% following the announcement of the U.S. Consumer Price Index (CPI), exceeding expectations yesterday. Still, it shows a weak rise again on the news of Hong Kong’s approval.

The halving is coming up on the 20th. Experts have analyzed that the halving will decrease supply and increase demand, pushing the price.