Financial Titans Harvest Fund and Southern Fund Eye Bitcoin ETFs, Seek Approval in Hong Kong

Two of China’s largest asset managers have applied to list Bitcoin spot ETFs in Hong Kong, hoping to side-step strict restrictions on cryptocurrency inside mainland China.
Crypto analysts anticipate an approval decision sometime in Q2 of this year, coinciding with a decision in the UK around the listing of Bitcoin spot ETNs.
Noelle Acheson, the former head of research at crypto lender, Genesis, says 2024 is shaping up as the ‘year of crypto ETFs’.

It looks like China is gearing up to enter the Bitcoin spot ETF fray. Two of the country’s largest asset managers, Harvest Fund and Southern Fund, submitted applications through their Hong Kong subsidiaries to launch new ETFs, according to Securities Times (in Chinese).

Related: Chinese Investors’ FOMO Craze Fuels Surge into US ETFs, Sparking Speculation about Crypto Influx

Both funds opted to apply in Hong Kong rather than mainland China because of the mainland’s near total bans on Bitcoin trading and mining; Hong Kong, by comparison, has a much more permissive stance.

These applications come after the Hong Kong Monetary Authority released a statement in December saying it would be willing to accept applications for cryptocurrency spot ETFs, which would theoretically be available to both institutional and retail investors.

Big Funds Could Make Big Waves With Bitcoin ETFs

Harvest Fund and Southern Fund are no small fry. Both manage well over US$200 billion in assets — around US$230 billion (AU$348 billion) for Harvest Fund and US$280 billion (AU$424 billion) for Southern Fund.

Should their ETF applications be approved, it’s anticipated the sentiment around crypto, particularly Bitcoin, in China could shift. It could potentially trigger a softening of regulation and a significant upswing in both retail and institutional investment.

Writing in her weekly newsletter on March 30, crypto analyst and former head of research at crypto lending firm Genesis, Noelle Acheson, said that the Hong Kong listed Bitcoin spot ETFs may also allow for ‘in-kind’ redemption, unlike the US ETFs. She suggests this may be a good sign for the level of interest these ETFs will attract, as ‘in-kind’ redemption offers several tax and cost advantages.

Acheson also says the fact that this kind of detail is leaking out suggests Hong Kong ETF approvals may be getting closer, and if they were to come soon “this would be a very big deal.”

Bloomberg’s Senior ETF analyst, Eric Balchunas, agrees the Hong Kong ETFs will likely allow ‘in-kind’ redemption, and suggests we may see approvals sometime during Q2 of this year — so before July.

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If this timeline plays out it would coincide with the expected approval of Bitcoin spot ETNs in the United Kingdom, and it’s also looking like Japan might approve Bitcoin spot ETFs sometime this year. As Acheson wrote in her newsletter, it really is starting to look like 2024 could be the year of crypto ETFs:

We will probably look back on 2024 as the Year of the Crypto ETFs. Sure, there will be other key industry milestones, such as new all-time highs, but the flurry of spot ETF listings is arguably an even bigger deal in terms of market impact.

Noelle Acheson, Crypto analyst