The Blubber

Hong Kong approves first bitcoin, ethereum spot ETFs

Hong Kong regulators have granted approval for the launch of spot bitcoin and ether exchange-traded funds (ETFs), according to asset managers, following similar moves in the U.S. this year.

Bitcoin was trading approximately 3% higher at 7:11 a.m. ET after experiencing a significant sell-off over the weekend.

Three ETF providers have received approval from Hong Kong's Securities and Futures Commission (SFC).

ChinaAMC announced that it had been granted regulatory approval for offering "virtual asset management services" and is currently "actively deploying resources in the development" of spot bitcoin and ether ETFs. OSL Digital Securities will serve as a custodian for ChinaAMC.

The companies have plans to launch bitcoin and ether ETFs, but they have not yet done so, despite receiving approval from the Hong Kong SFC.

When contacted by CNBC, the Hong Kong SFC was not immediately available for comment.

Crypto trading is effectively prohibited in mainland China following a major crackdown on the sector in 2021. However, Hong Kong has been gradually positioning itself as a regulated crypto hub to compete with other jurisdictions like Dubai and Singapore. It remains uncertain whether mainland Chinese investors will be permitted to invest in cryptocurrencies through the ETFs.

Hong Kong's regulatory developments come after U.S. securities regulators approved spot bitcoin ETFs, which have attracted billions of dollars in inflows.

A bitcoin ETF enables investors to gain exposure to the asset's price movements without needing to own the actual cryptocurrency. Many observers believe that ETFs will facilitate the entry of more traditional investors into the crypto market.

Hong Kong is poised to become one of the first locations globally to approve an ether ETF. The U.S. Securities and Exchange Commission has not yet approved such a product, and asset managers informed CNBC last week that they do not anticipate the regulator doing so.