APAC responds to Bitcoin ETF after US approvals

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By Kadan Stadelmann

Since the U.S. greenlit Bitcoin ETF issuance, jurisdictions the world over are now likely to follow suit and do the same. For instance, Australia has already made the move. 

Australian asset manager Monochrome plans to launch the nation’s first spot bitcoin exchange-traded fund (ETF) after filing an application with securities exchange Cboe Australia to list its flagship bitcoin ETF product. The Australian Securities and Investments Commission already approved Monochrome’s proposal. 

To be sure, the product won’t be listed on ASX, where larger volumes might be expected. Australian investors have had access to physically backed Bitcoin ETFs since May 2022 on Cboe Australia. 

The rest of APAC would be best served to look to do the same. Of course, not all Asian jurisdictions seem gung ho. For instance, Singapore and Thailand have telegraphed no interest in permitting Bitcoin ETFs, let alone crypto ETFs.

Hong Kong: The next Bitcoin ETF world leader? 

Hong Kong is most likely to introduce the next Asian crypto ETF. Regulators there published two circulars in December to highlight the would-be requirements for such an ETF.

Hong Kong’s Securities and Futures Commission (SFC) accepted already a spot Bitcoin ETF application from asset manager Harvest and more institutions are looking to apply, as well.

Hong Kong won’t have a problem getting products off the ground and running once approved due to its strong financial reputation, rich capital pools, and trusted stock market. Regulators in Hong Kong have said they plan to allow retail spot virtual ETF access and are open to applications from funds wishing to launch one.

In addition, Hong Kong is perhaps moving towards a friendlier regime for crypto ETFs than the U.S.. For example, Hong Kong’s ETFs could end up allowing cash and in-kind subscriptions. In other words, dealers can use Bitcoin to subscribe or redeem ETF shares. 

In the U.S., only cash is permitted, for the US SEC doesn’t want dealers to use Bitcoin directly.

In general, Hong Kong’s Securities and Futures Commission has stated a desire to increase access for digital assets, of which Bitcoin spot ETF might prove to be the chosen inroad. 

Generally, and in contraposition to China, Hong Kong has taken a friendly approach to the crypto industry. It has even encouraged banks to work with crypto firms. And Hong Kong’s appetite for its own Bitcoin ETF will only grow in the wake of the U.S.’s Bitcoin ETFs.

Already, the Hong Kong division of Harvest Fund Management, a major Chinese asset manager, submitted an application to the local financial regulator. The Securities and Futures Commission will decide next whether or not to follow the U.S.’s lead on major spot Bitcoin ETFs.

Important to note, however, is the fact that Hong Kong did not have any crypto regulation until recently, suggesting it is somewhat slow to act when it comes to cryptocurrency products. And while this might be changing, nothing is guaranteed.

If approved, a spot Bitcoin ETF in Hong Kong may have a different structure than their U.S. counterparts; in particular the fund would be allowed to directly receive BTC from subscribers and pay Bitcoin to investors in the event of redemptions.

As for Ethereum spot ETFs in Hong Kong, the fact that the U.S. has yet to approve such a product makes it less likely than if the jurisdiction were to approve Bitcoin. Robust and enforceable regulation is likely coming to the U.S. crypto industry, and therefore the community must work together towards reasonable legislation. 

Singapore says no Bitcoin ETFs for retail

On the opposite end of the spectrum is Singapore, a less likely Asian nation to follow suit and allow Bitcoin ETFs at least anytime soon. The Monetary Authority of Singapore (MAS) stated in January that trading in cryptocurrencies is “highly volatile and speculative in nature” and thus not open to retail investors.

It further made a point to elaborate spot Bitcoin ETFs “are not approved by MAS for offer to retail investors.” 

Thailand has no plans for Bitcoin ETF, permits private funds 

The Thai Securities and Exchange Commission delayed its decision on spot Bitcoin ETFs, noting it had no plans to allow the product “for the time being.” 

The Commission said that spot bitcoin ETFs in foreign markets remain in their infancy and “may not deliver direct economic value suitable for the current context of Thailand.”  

Still, Thailand’s Securities and Exchange Commission has taken steps to make it easier for the crypto industry to further bloom in the jurisdiction and will likely change its ETF stance once there is more regional and global clarity.

For now, Thailand’s Securities and Exchange Commission has changed rules to permit private funds to invest in spot Bitcoin ETFs, though it will be limited to institutional investors and ultra-high-net worth individuals.

South Korea divided

In South Korea, crypto ETFs have been a matter of controversy. South Korea’s Office of the President has asked the financial regulator there to reconsider a spot Bitcoin ETF. South Korea’s government is seemingly looking at launching spot Bitcoin and/or crypto ETFs.

Nevertheless, the Financial Services Commission cautioned firms that brokering foreign-listed Bitcoin spot ETFs might prove to be a violation of capital market regulations, prompting numerous South Korean securities companies to stop trading foreign spot Bitcoin ETFs.

How will APAC catch up 

The U.S. has opened the floodgates. When it approves a wildly new and exciting financial product such as Bitcoin ETFs, the rest of the world, including APAC, listens. 

To be sure, regulatory clarity on a global level is sure to precipitate governments and regulators wanting to take advantage of new opportunities like Bitcoin spot ETFs. 

ETF is the perfect combination of crypto and regulatory protections, and therefore a great starting point for any jurisdiction to begin liberalising their laws around Bitcoin and crypto. What’s for sure? It’s time for APAC regulators and the industry to start aligning on controls and compliance so that APAC can catch up to the U.S.. 

Kadan Stadelmann is a blockchain developer, operations security expert and Komodo Platform’s chief technology officer. His experience ranges from working in operations security in the government sector and launching technology startups to application development and cryptography. Stadelmann started his journey in blockchain technology in 2011 and joined the Komodo team in 2016.

Note: The views and opinions expressed by the author in this article are solely those of the author and do not reflect the viewpoints and opinions of Deeptech Times


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