Hong Kong becomes the first in Asia to introduce Bitcoin and Ether ETFs, leading the way in virtual asset investment.

Hong Kong took a significant step toward establishing itself as a regional hub for virtual asset investment by launching Asia’s first spot bitcoin and ether exchange-traded funds (ETFs) on Tuesday. Following in the footsteps of the United States, which paved the way for mainstream investors to integrate Bitcoin into their portfolios through ETFs linked to the cryptocurrency’s spot price, Hong Kong’s exchange welcomed six funds from three managers—Bosera Funds, China Asset Management (Hong Kong) Limited, and Harvest Global Investments. These funds offer spot bitcoin and ether ETFs tradable in both Hong Kong and US dollars, with ChinaAMC (HK) also allowing trading in Chinese yuan, thereby expanding access to digital assets for investors.

The initial trading hours saw promising performance for the new ETFs, with price increases ranging from 0.62 percent to 3.81 percent, indicating investor interest and confidence in this emerging asset class.

While some experts predicted that these funds might not attract inflows comparable to their US counterparts, industry observers remain hopeful about their potential to drive broader adoption of digital assets worldwide.

The inclusion of bitcoin and ether ETFs in Hong Kong’s financial ecosystem is part of the city’s efforts to position itself competitively against established financial centers like the US, leveraging its unique advantages such as in-kind trading.

Unlike traditional ETFs, which primarily transact in fiat currencies like the US dollar, Hong Kong’s approach enables investors to conduct in-kind creation and redemption through eligible dealers, facilitating direct investment using bitcoin and ether.

Han Tongli, CEO of Harvest Global, emphasized this distinct advantage over the US market, positioning Hong Kong as a major player in the global financial arena.

Tongli recognized the city’s role in fostering innovation and development, defending its status as a premier global financial hub.

Furthermore, Hong Kong’s regulatory flexibility presents an opportunity for China to explore virtual asset trading, a sector currently prohibited on the mainland.

While demand for bitcoin ETFs in the US has cooled off since an initial surge in February, Hong Kong’s venture into digital asset investment reflects a broader trend toward embracing cryptocurrencies and blockchain technology.

With regulatory bodies like the Securities and Futures Commission demonstrating their readiness to facilitate retail investment in digital asset funds, Hong Kong is poised to attract further interest from fund managers looking to capitalize on the growing market.