How Asia’s next crypto investment wave will be ignited from Bitcoin ETFs

On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved multiple applications for spot Bitcoin ETFs. On day one, $4.6B in shares were traded, with cumulative trading volume exceeding the $50B mark by February 22. The ETF approval in the U.S. is expected to have a far-reaching impact across Asian markets where investment flows are already significant, especially in institutional investing, and picking up pace. 

The question on the minds of observers, investors, and industry participants is: “What’s next?” By taking stock of what has happened in the US and as we look East, we can better understand what to expect in markets like Hong Kong and other countries in the region.

Spotlight on Hong Kong

Optimism for approval exists about a spot Bitcoin ETF in Hong Kong. In January, they accepted the first application from one of China’s major asset funds, Harvest Fund Management. Although hopes existed for approval as early as Q1 2024, it wouldn’t be surprising to see it take until at least Q2. Approvals of traditional ETFs by Hong Kong’s Securities and Futures Commission (SFC) typically take weeks to months.

Given that Hong Kong has already approved a few crypto ETF futures funds—including the CSOP Bitcoin Futures, CSOP Ether Futures, and Samsung Bitcoin Futures—one can reasonably hope that the path to a spot ETF approval will come with time. 

On the face of it, giving those approvals would make sense all around. Hong Kong serves as a conduit to China’s wealth and has established a regulatory environment to go alongside the depth of its asset and wealth management sector. Plus, because Hong Kong already offers Ethereum futures, they may be more open to spot Ethereum ETFs.

In comparison to the U.S., the SEC has received applications for spot Ethereum ETFs with a response required by May 23, although it was allowable earlier; on February 7, the SEC issued a delay statement. 

Assessing the Likelihood of Approval From Other Asian Countries

The only major countries in the APAC region in which spot Bitcoin ETFs are not in any stage of development seem to be China, Thailand, and Singapore. Major Asian countries that will likely follow in the general pathway of the U.S. and Hong Kong include Japan, South Korea, and Australia; although these are relatively early days, people are already expressing interest in these products. Regulations in each country are somewhat different, and so the paths towards crypto product approvals will also…