Top Chinese mutual funds exploring Bitcoin ETFs via Hong Kong units

Leading Chinese mutual funds are actively exploring Bitcoin exchange-traded funds (ETFs) through their subsidiaries in Hong Kong, with adoption set to kick off within the second quarter once regulatory approval is secured, local media reported on April 8.

The move marks a significant pivot toward crypto investment among firms in the region, which have avoided digital assets for years after China’s ban on Bitcoin mining and crypto in 2021.

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Shifting stance

Local media reported that Jiashi Fund and Southern Fund subsidiaries are at the forefront of adopting Bitcoin ETFs and have already filed regulatory applications.

Jiashi Fund has applied to launch a Bitcoin spot ETF, while Huaxia Fund’s subsidiary recently partnered with Bitcoin ETF custodian HashKey. Both firms are awaiting regulatory approval to proceed further.

By leveraging their Hong Kong branches, top mutual funds are looking to expand their investment portfolios into digital assets amid the shifting stance in the city-state. The firms are reportedly applying for Bitcoin licenses in Hong Kong to tap into the regulatory framework offered by the jurisdiction.

Industry insiders suggest that spot Bitcoin ETFs could launch by the second quarter, with Hong Kong positioned to facilitate the creation and redemption of these products for companies domiciled in China.

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Southern Fund’s subsidiary made headlines in December 2022 by launching Asia’s first crypto ETFs, positioning the Hong Kong stock market as a direct provider of Bitcoin and Ethereum futures ETFs.

Bitcoin’s strong performance

According to the report, Bitcoin ETFs’ performance and market presence have encouraged more mutual funds to enter the emerging field. For instance, Southern Fund’s futures Bitcoin ETF, which was launched at the end of 2022, has demonstrated impressive gains with a 134% increase in value in 2023.

Regulatory officials in Hong Kong have expressed a commitment to supporting responsible and stable development of the digital assets industry. The region has become a hub for over 220 Web 3 companies.

The recent surge in Bitcoin’s price to new highs boosts the confidence of fund companies in exploring spot ETFs, with the crypto’s market capitalization surpassing $1.3 trillion.

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Author: Assad Jafri

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