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China’s largest asset managers apply for spot Bitcoin ETF

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By Imelda Cotton - 
China Hong Kong cryptocurrency bitcoin ethereum ETFs

Some of China’s biggest asset managers are using Hong Kong subsidiaries to enter the Bitcoin exchange-traded fund (ETF) market.

According to a report from China’s Securities Times, the hedge fund giants — which include Harvest Fund Management and Southern Fund — have submitted applications through their Hong Kong units to the country’s financial regulator, the Securities & Futures Commission (SFC) of Hong Kong.

The equity funds have reportedly applied for issuing spot Bitcoin ETFs through the city, amid a month-long rally in cryptocurrency prices and Hong Kong’s increased efforts to build itself into an international fintech hub.

The move is reported to reflect growing institutional interest in Bitcoin despite China’s previous hostility towards it.

Harvest application

Chinese asset management company Harvest — headquartered in Beijing with over $230 billion in funds — submitted its Bitcoin application to the SFC in January this year.

The company commenced launching futures crypto ETFs in December 2022, the first to debut in Asia.

It has also reportedly signed a co-operation agreement with Hong Kong’s licensed crypto exchange HashKey to “collectively promote and advance initiatives related to Web 3.0” in the country’s asset management industry.

Bitcoin trailblazer

Southern Dongying  — a subsidiary of Southern Fund that manages $284b in assets — has also emerged as an SFC applicant.

The company is considered to be a Bitcoin ETF trailblazer, with the introduction of Southern East English Bitcoin futures ETF and Southern East England Ethereum futures ETF in Hong Kong.

The products reflect its commitment to innovation and portray the region’s growing prominence as a hub for cryptocurrency investment activities.

Industry analysts have suggested that approval of Bitcoin ETF products from such financial heavyweights could validate the cryptocurrency in the eyes of Chinese regulators and investors.

Broad impact

The involvement of Harvest and Southern in Bitcoin ETFs is expected to have a broad impact on the future of cryptocurrencies, leading to increased liquidity in the Bitcoin market (potentially stabilising its price) and possibly setting a precedent for other financial institutions to explore similar offerings.

While the Securities Times report did not disclose a full list of Chinese companies interested in following Harvest and Southern’s lead, it said other public equity funds in the country were exploring the feasibility and potential outlook of spot Bitcoin ETF products.