The move would make Hong Kong the first domicile in the Asia-Pacific region to approve a crypto-backed, exchange-based investment fund. It would also put the island in prime position in the race to become the digital assets hib for the region.

According to a Reuters report, the Securities and Futures Commission (SFC) is set to grant approval later this month.

So far there have been four applications from entities based in mainland China, including Harvest Fund Management, China Asset Management and Bosera Asset Management.

The SFC has already granted approval to Harvest and CAM to provide virtual-asset related fund management services.

By greenlighting the crypto ETF applications, Hong Kong would be following in the footsteps of the US, which granted approval for the first spot bitcoin ETFs in January, albeit only as a result of legal cases brought by a number of crypto trading firms.

Those US ETFs have amassed more than $58 billion in assets so far.

However, Hong Kong’s funds market is unlikey to expereicne the same level of investment, it will be hoping that the approvals will provide a boost in the face of challenges posed by the economic slowdown in China and the hangover from the pandemic, including the strict travel restrictions which made it hard for Hong Kong asset managers to attract and retain quality staff.