Hong Kong Managers Disclosed Conditional Nods for Spot Bitcoin and Ether ETFs

Hong Kong asset managers and their service providers announced on April 15, 2024 that proposed exchange-traded funds holding spot bitcoin and ether had received conditional or in-principle regulatory clearances. The disclosures moved several products toward public offering while stopping short of final authorization or permission to begin trading.

The distinction mattered. Some contemporaneous reports described the Securities and Futures Commission’s action as approval of Hong Kong’s first spot cryptocurrency ETFs. The more precise event-day record showed that applicants had cleared an important regulatory stage but still faced conditions, including required documents, fees and approval from Hong Kong Exchanges and Clearing.

What the applicants disclosed

OSL Digital Securities said a proposed Harvest Global spot bitcoin and ether ETF had received approval in principle for authorization as a Hong Kong public offering. OSL was appointed as the product’s virtual-asset trading platform and sub-custodian, giving the proposal regulated infrastructure for executing transactions and safeguarding its underlying assets.

China Asset Management (Hong Kong) separately announced that the SFC had approved it to provide virtual-asset management services. ChinaAMC said it was working with OSL and BOCI-Prudential Trustee to develop spot bitcoin and spot ether ETFs. Its April 15 release did not say that those funds had received final authorization, provide ticker symbols or establish a trading date.

South China Morning Post reported that Bosera Asset Management’s Hong Kong arm and HashKey Capital had received conditional approval for their proposed products. The newspaper also obtained an explanation from the SFC: a conditional authorization letter meant an application generally satisfied the regulator’s requirements, subject to conditions such as paying fees, filing documents and obtaining HKEX listing approval.

That explanation narrowed the verified claim. April 15 marked regulatory progress for proposed products from Harvest, Bosera and HashKey, alongside ChinaAMC’s authorization to manage virtual assets and develop ETFs. It was not the first trading session, a completed public offering or evidence of investor demand.

The rulebook behind the clearances

The SFC had established the applicable framework on December 22, 2023. Its circular allowed authorized funds to invest directly in virtual assets available to the Hong Kong public on SFC-licensed trading platforms. Management companies needed a record of regulatory compliance and staff with relevant virtual-asset experience.

Spot transactions generally had to pass through an SFC-licensed virtual-asset trading platform or a qualifying authorized financial institution. The framework permitted both cash and in-kind subscriptions and redemptions. That meant participating dealers could, subject to the rules, transfer bitcoin or ether into a fund’s custody account when creating shares rather than using cash exclusively.

Custody requirements were substantial. Assets had to be segregated, most holdings were expected to remain in cold wallets, and private keys had to be securely stored in Hong Kong with restricted access and appropriate backup controls. Funds also needed a reputable volume-based benchmark for valuation and prominent disclosure of price, custody, cybersecurity and blockchain-fork risks.

Why April 15 mattered

The announcements came three months after the U.S. Securities and Exchange Commission approved exchange rule changes for spot bitcoin products on January 10, 2024. Hong Kong’s proposed lineup extended the institutional model to ether while comparable U.S. spot ether applications remained unresolved on April 15.

That did not make the products equivalent across jurisdictions. Hong Kong’s willingness to permit in-kind creation and redemption was a structural difference from the cash-based model accepted for the U.S. spot bitcoin launches. It potentially reduced the need for every creation or redemption to trigger a cash-market transaction, although no event-day evidence established lower costs or better tracking.

No reliable conclusion about capital flows could be drawn on April 15 because the Hong Kong products were not yet trading. The announcements disclosed no assets under management, subscriptions, trading volume or operating history. Their immediate significance was regulatory and institutional: Hong Kong had moved proposed spot bitcoin and ether funds through a consequential preliminary gate, while final authorization and market adoption remained unverified.