OSL executive says Hong Kong could debut spot crypto ETF by mid-year

Gary Tiu, executive director and head of regulatory affairs of OSL, a Hong Kong-licensed crypto exchange, said that the special administrative region could potentially see the issuance of its first spot crypto exchange-traded funds by the middle of this year, according to local media.

The Hong Kong Economic Journal reported Monday that Tiu said that OSL is in close communication with many fund companies— and that five to 10 companies are currently studying such an ETF. Tiu added that around five companies have progressed faster than the others, with the possibility of rolling out Hong Kong’s first spot crypto ETFs by the middle of this year.

Tiu also acknowledged the pressure to ensure that fees are not excessively high in the exchange’s collaboration with fund companies, given that there are currently only two licensed crypto exchanges in the city, according to the media report.

Tiu confirmed the details in the media report with The Block on Monday, saying that the introduction of spot crypto ETFs is a pivotal development in the crypto space in the city. He added, “These ETFs offer several crucial benefits, including promoting orderly markets for underlying digital assets, establishing a model for local investor protection, and accelerating integration between regulated digital asset platforms and traditional financial institutions.”

The OSL executive’s comment comes after HashKey, another licensed crypto exchange in Hong Kong, said earlier this month that it was in talks with asset managers exploring the launch of potential spot crypto ETFs. Livio Weng, chief operating officer of HashKey, said that about ten fund companies have begun exploring the launch of such ETFs in the city.

Last week, Venture Smart Financial Holdings Ltd, a Hong Kong-based financial services firm, announced its plan to potentially launch a spot bitcoin ETF within the first quarter, according to Bloomberg. It targets to grow the potential ETF to reach $500 million in assets under management by the end of this year.

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Hong Kong is preparing to pave the way for spot crypto ETFs, with the Securities and Futures Commission and the Hong Kong Monetary Authority, the city’s de facto central bank, announcing in December that both agencies have reviewed their existing policy. The regulators published two circulars addressing the requirements for spot crypto ETFs.

The SFC noted in the December circular that transactions of crypto made by spot crypto ETFs should be carried out through SFC-licensed crypto platforms or authorized financial institutions.

Hong Kong has currently listed several futures-based crypto ETFs — Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF.

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