Crypto Market Braces for "China Earthquake" as Hong Kong Greenlights Spot Bitcoin ETFs

Bitcoin and other major cryptocurrencies like Ethereum, XRP, and Solana have seen remarkable price surges in recent months, with Bitcoin topping $43,000. This rally coincides with growing anticipation around the approval of U.S. spot Bitcoin exchange-traded funds (ETFs), a sentiment now increasingly focused on Hong Kong.

Hong Kong's securities regulator has reportedly received its first spot Bitcoin ETF application from a major Chinese fund manager, with local media suggesting approval could come "after the Spring Festival" on February 10. This move could mirror the U.S. Securities and Exchange Commission's approach, allowing multiple funds to launch simultaneously.

Financial giants are already signaling their intentions. Samsung Asset Management, which launched a Bitcoin futures ETF in 2023, is considering a spot ETF, while Venture Smart Financial Holdings (VSFG) aims to launch one in Q1 2024. Furthermore, Hong Kong is advancing its stablecoin regulations, with companies like Harvest Global Investments and RD Technologies participating in trials.

Livio Weng, COO of Hong Kong crypto exchange HashKey, revealed that about 10 fund companies are exploring spot crypto ETFs in the city. Hong Kong, a special administrative region of China, has adopted a pro-crypto stance over the past year, implementing regulations in 2023 that opened doors for both institutional and retail crypto trading.

Despite mainland China's 2021 crypto ban, a Reuters investigation found that Chinese investors are actively seeking ways to trade crypto in Hong Kong. An executive noted that China's economic downturn is driving investors to allocate assets offshore, with many mainlanders entering the Hong Kong market daily. Crypto exchanges like OKX and Binance reportedly facilitate trading for Chinese investors with overseas bank accounts.

This trend is corroborated by Chainalysis data, showing a significant increase in crypto-related activities in China, propelling it from 144th to 13th in global peer-to-peer trade volume. The potential approval of Hong Kong spot Bitcoin ETFs is seen as a "huge China earthquake," poised to bring substantial new capital and influence to the global cryptocurrency market.