Harvest and China Asset Management have been approved for cryptocurrency asset management qualifications in Hong Kong and will list ETFs before the end of April

 Author: Xie Zhaoqing, Tencent Finance "First Line"

The Hong Kong Securities and Futures Commission has finally taken a more substantial step in digital currency.

In the early morning of April 10, the Hong Kong Securities and Futures Commission updated the list of fund companies that manage virtual assets on its official website, adding Harvest Global Asset Management Co., Ltd. (abbreviated as Harvest Global) and China Asset Management (Hong Kong) Co., Ltd. (abbreviated as China Asset Management), that is, adding virtual asset management business to the original traditional asset management business of these public funds.

This means that the leading public fund companies in the mainland have finally "killed" into the virtual asset industry in Hong Kong and have the qualifications to issue relevant currency circle fund products.

The official website of the Hong Kong Securities and Futures Commission shows that there are now 18 funds in Hong Kong that can carry out "currency circle" asset management. However, Harvest Global and China Asset Management are among the first batch of public funds in Hong Kong to enter the "currency circle".

Tencent Finance "First Line" learned on January 26 this year that Harvest Global was the first fund to submit a Bitcoin spot ETF in Hong Kong.

After nearly three months, Harvest International finally added the qualification of "currency circle" asset management. This means that public funds including Harvest International and China Asset Management are eligible to issue fund products related to the "currency circle" to the public, such as Bitcoin spot ETFs. Retail investors can subscribe to relevant products through the Hong Kong Stock Exchange.

Tencent Finance "First Line" exclusively learned from different sources that the Hong Kong Securities Regulatory Commission urgently updated the list of virtual asset management funds in the early morning of April 10 because it planned to announce the list of Hong Kong's first batch of Bitcoin spot ETFs on April 15.

Tencent Finance "First Line" learned from different sources that the Hong Kong Securities Regulatory Commission originally planned to approve a total of 4 Bitcoin spot ETFs in the first batch, including Harvest International, China Asset Management, Bosera Funds and Value Partners.

However, Bosera Funds and Value Partners have not yet appeared in the list of virtual asset management funds updated by the Hong Kong Securities Regulatory Commission in the early morning of April 10. Tencent Finance "First Line" learned that these two funds do not have independent ROs (note, Hong Kong licensed responsible persons) that meet the requirements of cryptocurrency asset management. They cooperated with cryptocurrency institutions Harshkey Capital and VSFG respectively. Data from the Hong Kong Securities Regulatory Commission shows that Harshkey Capital and VSFG are already qualified cryptocurrency asset management institutions.

Tencent Finance "First Line" also learned that some Bitcoin spot ETF applicants, including China Asset Management, temporarily set up teams about a month ago and submitted applications in the second week of March. China Asset Management was "super fast" and obtained approval from the Hong Kong Securities Regulatory Commission in two weeks. Tencent Finance "First Line" learned that China Asset Management once poached ROs from a very small Bitcoin futures institution. As of press time, China Asset Management has not been contacted for comment.

Tencent Finance "First Line" learned that the solutions required to submit Bitcoin spot ETFs in Hong Kong this time involve at least 20 partner institutions, including Bitcoin custodians and market makers, institutions holding comprehensive accounts for virtual asset transactions, etc. If the Hong Kong application process and conventional communication channels are strictly followed, it is unlikely that any institution in Hong Kong can complete all the application materials in about half a month.

According to Hong Kong's process, after the Hong Kong Securities and Futures Commission approved the first batch of Bitcoin spot ETFs on April 15, the Hong Kong Stock Exchange needed about 2 weeks to prepare for product listing and other matters. However, the entire Bitcoin spot ETF project had detailed communication and planning with the Hong Kong Stock Exchange in advance, and it is expected to be completed in about 10 days. Tencent Finance "First Line" learned that the Hong Kong Securities and Futures Commission originally planned to list the Bitcoin spot ETF in Hong Kong around April 25, no later than the end of April.

This is something worth looking forward to for ordinary investors, that is, they can make Bitcoin-linked investments by subscribing to such ETFs, which is equivalent to opening up channels for retail investors to invest in the currency circle.

The approval of the Hong Kong Bitcoin spot ETF was about three months after the US Securities and Futures Commission approved the first batch of US Bitcoin spot ETFs on January 11. Public data shows that the asset management scale of the top 10 Bitcoin spot ETFs in the United States is about US$57 billion (including GBTC), and the top three account for more than 88%.

Data shows that the scale of GBTC under Grayscale Bitcoin Trust is 23.1 billion US dollars. GBTC was converted from a previous closed-end fund to a Bitcoin spot ETF when the US Securities and Exchange Commission approved the ETF. At that time, the scale was close to 30 billion US dollars.

Following GBTC are the Bitcoin Spot ETF (IBIT) issued by BlackRock, a large global public fund, and FBTC issued by Fidelity Funds, with management scales of 17.2 billion US dollars and 9.9 billion US dollars respectively. Tencent Finance "First Line" learned that the Hong Kong Securities Regulatory Commission once expected Hong Kong to also have a similar market situation, that is, it hoped that the Bitcoin spot ETF of Harvest Asset Management could be benchmarked against BlackRock's IBIT.

Some interested institutional investors in Hong Kong have analyzed to Tencent Finance "First Line" that Bitcoin is now in an upward trend. In the case of an inactive Hong Kong stock market, Bitcoin spot ETF is an asset that many traditional institutional investors hope to allocate. However, compared with the United States, Hong Kong's Bitcoin spot ETF may be about one-tenth of the size of the United States, that is, it is expected that Harvest International's Bitcoin spot ETF may reach a scale of about US$2 billion.

It is understood that the Hong Kong Securities and Futures Commission has been catching up and accelerating after the United States approved this type of ETF.

Compared with the US Bitcoin spot ETF, which is subscribed in fiat currency, Hong Kong's local Bitcoin spot ETF has added Bitcoin spot subscription, that is, investors can subscribe to this type of ETF in Hong Kong Stock Exchange with fiat currency, or subscribe with Bitcoin spot through compliant currency exchanges. This is the main reason for the delay in the listing of Hong Kong Bitcoin spot ETF.

Public information shows that there are only two licensed virtual asset exchanges in Hong Kong, HashKey and OSL. This means that if investors want to subscribe to this type of ETF with Bitcoin spot, they can only go through the above two exchanges, and there is no other choice.

Tencent Finance "First Line" once learned that on January 26, Harvest International, as the first institution, submitted an application for Bitcoin spot ETF in Hong Kong. At that time, the two local compliant currency exchanges in Hong Kong had never understood the relevant procedures, and even did not understand the technology and procedures of ETFs internally. This also delayed the progress of the entire project to a certain extent.

More importantly, although neither exchange has fully disclosed its local specific user data, some investors told Tencent Finance's "First Line" that compared with platforms such as Coinbase or Binance in the United States, the users of the two existing exchanges in Hong Kong are completely not on the same level. However, as the leading exchanges in the cryptocurrency circle, Coinbase and Binance have temporarily given up the plan to submit applications in Hong Kong.