Can Hong Kong’s Strongly Supported Virtual Asset ETFs Usher in a New Web3 Era?

·

The rapid evolution of digital finance has placed Hong Kong at the forefront of Asia’s financial innovation, particularly in the realm of virtual assets. In August 2024, Foresight News — a leading Chinese-language media outlet focused on Web3 — hosted its annual “FORESIGHT 2024” summit in Hong Kong. Over two weeks, industry leaders from Hashkey Group, OSL, Fosun Wealth, and China Asset Management (Hong Kong) gathered for a pivotal roundtable discussion on virtual asset ETFs.

The consensus was clear: Hong Kong’s strategic embrace of virtual asset ETFs could catalyze a transformative shift in the global Web3 landscape.

Livio, COO of HashKey Group, emphasized that if Hong Kong successfully launches Ethereum ETF staking, it could trigger a global capital magnet effect. Chen Zhao, Digital Assets Director at Fosun Wealth, highlighted that virtual asset ETFs serve as a crucial educational tool, helping traditional investors understand digital assets. Gary Tiu, Executive Director at OSL, pointed out that these ETFs are fostering mutual growth between financial intermediaries and the crypto market.

Meanwhile, Alvin Zhu, Head of Digital Asset Management at China Asset Management (Hong Kong), described the current momentum as part of Hong Kong’s fourth wave of financial innovation, driven by Web3 technologies. He noted that spot virtual asset ETFs, tokenized real-world assets (RWA), central bank digital currencies (CBDCs), and stablecoins are bridging the gap between the physical economy and digital finance.

👉 Discover how ETF innovation is reshaping global digital finance.

This unified optimism reflects Hong Kong’s proactive stance — not just in adopting virtual asset ETFs, but in shaping their future.

The Evolution of Virtual Asset ETFs in Hong Kong

As a global financial hub, Hong Kong has demonstrated strong institutional support for virtual asset ETFs. The journey began as early as December 16, 2022, when Southern East Asset Management launched Asia’s first virtual asset ETF, listing it on the Hong Kong Stock Exchange. This marked a significant milestone in integrating digital assets into traditional finance.

Fast forward to 2024: following the U.S. approval of Bitcoin spot ETFs, pressure mounted on Hong Kong to accelerate its own offerings. On April 6, Legislative Council member Ricky Choi announced that “Bitcoin spot ETFs will soon be available in Hong Kong.” By the end of the month, the first BTC spot ETFs were live.

Even more notably, Hong Kong became one of the first jurisdictions globally to launch Ethereum spot ETFs, further solidifying its leadership in digital asset innovation.

Today, Hong Kong hosts six virtual asset spot ETFs:

These are offered by asset managers including AMC, Bosera & Hashkey, and Harvest Fund. According to SoSoValue data as of August 13, 2024:

While these figures may seem modest compared to U.S. markets, they represent a critical foundation for institutional adoption in Asia.

Regulatory Framework: Balancing Innovation and Investor Protection

One of the key reasons Hong Kong’s virtual asset ETF ecosystem stands out is its robust regulatory framework. The Securities and Futures Commission (SFC) has implemented stringent requirements to ensure market integrity and investor protection.

To operate a virtual asset ETF in Hong Kong, fund managers must:

Moreover, the SFC mandates that at least 98% of underlying assets be stored in cold wallets, significantly reducing exposure to cyber threats. All transactions involving spot virtual assets must occur through SFC-approved virtual asset trading platforms or institutions authorized by the Hong Kong Monetary Authority (HKMA).

These measures reflect a balanced approach: encouraging innovation while safeguarding market stability. Unlike jurisdictions with lax oversight, Hong Kong’s model builds trust among institutional investors and retail participants alike.

👉 Explore how secure custody solutions are enabling institutional crypto adoption.

Can Virtual Asset ETFs Redefine Hong Kong’s Web3 Future?

Jen Bai, Head of the Hong Kong office at Shanghai ManQin Law Firm, shared her insights during the FOERSIGHT 2024 summit: “Hong Kong’s strong support for virtual asset ETFs underscores its ambition to lead the next wave of global financial innovation.”

She argues that these ETFs are more than investment vehicles — they are bridges between traditional finance and decentralized ecosystems. By enabling regulated access to Bitcoin and Ethereum through familiar financial instruments, ETFs lower entry barriers and promote broader market participation.

But can they truly reshape the Web3 landscape?

The answer lies in three key factors:

1. Regulatory Evolution

Hong Kong’s current framework is strict but adaptive. Future developments — such as Ethereum staking ETFs — could unlock new yield opportunities and deepen liquidity. As HashKey Group suggested, staking-enabled ETFs might attract global capital flows, turning Hong Kong into a Web3 gateway for Asia.

2. Market Education

Many investors still view cryptocurrencies as speculative or risky. Virtual asset ETFs serve as onboarding tools, offering exposure without requiring direct wallet management or private key custody. This educational role is essential for long-term adoption.

3. Technological Integration

The convergence of blockchain with real-world assets (RWA), decentralized identity (DID), and programmable finance will define Web3’s next phase. ETFs can act as entry points into this ecosystem, especially when combined with tokenization and smart contract-based financial products.

Jen Bai concludes: “Virtual asset ETFs are not just financial products — they’re catalysts for systemic change. With continued innovation and regulatory clarity, Hong Kong can set a global benchmark for Web3 integration.”

👉 See how tokenization is connecting traditional finance with blockchain innovation.

Frequently Asked Questions (FAQ)

Q: What are virtual asset ETFs?
A: Virtual asset ETFs (Exchange-Traded Funds) allow investors to gain exposure to cryptocurrencies like Bitcoin and Ethereum through regulated stock exchanges, without directly holding or managing digital wallets.

Q: How many virtual asset ETFs are available in Hong Kong?
A: As of August 2024, there are six — three Bitcoin spot ETFs and three Ethereum spot ETFs — offered by major asset managers including Bosera & Hashkey and Harvest Fund.

Q: Are Hong Kong’s virtual asset ETFs safe?
A: Yes. They operate under strict oversight by the Securities and Futures Commission (SFC), with requirements for cold storage (98%+), licensed custodians, and approved trading platforms to protect investor assets.

Q: Can retail investors buy virtual asset ETFs in Hong Kong?
A: Yes. Unlike some earlier restricted models, current virtual asset ETFs in Hong Kong are accessible to both institutional and retail investors through approved brokers.

Q: What is the difference between a spot ETF and a futures-based ETF?
A: A spot ETF holds the actual underlying asset (e.g., real Bitcoin), while a futures-based ETF tracks price movements via derivatives contracts. Spot ETFs are generally seen as more transparent and less volatile.

Q: Could Hong Kong launch staking-based Ethereum ETFs?
A: It’s possible. Industry leaders like HashKey Group have advocated for Ethereum staking ETFs, which would allow investors to earn staking rewards through regulated funds — a potential game-changer for yield-seeking capital.

Core Keywords:

With strong regulatory support, growing market infrastructure, and increasing institutional interest, Hong Kong is positioning itself not just as a regional player — but as a global leader in the Web3 financial revolution.