The Hong Kong government is reportedly considering the launch of a spot cryptocurrency exchange-traded fund (ETF), which has generated excitement within the cryptocurrency community. This development is seen as significant in the midst of the economic confrontation between the United States and China. Arthur Hayes, co-founder of BitMEX, believes that competition between the two economies will ultimately benefit Bitcoin. Cryptocurrency brand Coin Bureau also believes that the potential launch of a spot crypto ETF in Hong Kong puts pressure on the U.S. Securities and Exchange Commission (SEC) to ease their regulatory pushback on such products.
Crypto influencer Lark Davis highlights that the news from Hong Kong indicates that the Chinese government does not want to miss out on crypto opportunities. Hong Kong is contemplating allowing retail investors to access spot ETFs linked to cryptocurrencies like Bitcoin, as long as regulatory concerns are addressed. Currently, both Hong Kong and the U.S. permit crypto ETFs linked to futures contracts, but they have not yet approved a spot crypto ETF. Unlike a futures Bitcoin ETF, a spot Bitcoin ETF directly holds BTC, allowing investors to gain exposure to the asset.
In terms of the global landscape, the U.S. was the first to launch futures-linked crypto ETFs in 2021, while Hong Kong followed suit in late 2022. However, demand for these products in Hong Kong has been low compared to other global crypto funds. The Hong Kong and Shanghai Banking Corporation reportedly enabled its customers to trade Bitcoin and Ether-based ETFs earlier this year. This potential move by Hong Kong further intensifies the competition between the U.S. and China in the cryptocurrency space.
