Bitcoin the main attraction at Hong Kong Web3 Festival ahead of ‘imminent’ ETF approval

Crypto industry executives were touting the benefits of bitcoin at the four-day Web3 Festival amid anticipation for the approval of spot ETFs this month
Companies from mainland China are also looking at offering bitcoin ETFs, with Harvest International and ChinaAMC reportedly set for approval, Chinese media say

Digital currencies

Xinmei Shen

Published: 9:30pm, 10 Apr 2024

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Hong Kong’s biggest annual Web3 gathering concluded on Tuesday with industry executives looking to capitalise on the ballooning bitcoin price ahead of what is expected to be the city’s imminent approval of spot exchange-traded funds (ETFs) for the virtual asset this month.

Industry leaders attending the Hong Kong Web3 Festival shared extremely optimistic projections of the world’s largest cryptocurrency token, the price of which is up 58 per cent to about US$69,000 this year, as the crypto faithful hope to extend the winning streak.

On the opening day of the event on Saturday, US investor Cathie Wood made the bold prediction that the price of bitcoin was headed to US$1.5 million by 2030. Mao Shixing, co-founder and CEO of crypto custody and wallet provider Cobo, who uses the name Discus Fish in English, said on Tuesday that he thinks even the prediction of a 2,000 per cent increase in the next six years is “conservative”.

Hong Kong’s Web3 Festival attracts smaller crowd but greater enthusiasm

While the conference touched on a range of topics, including real-world asset tokenisation and artificial intelligence, “bitcoin and its ecosystem projects” clearly took “centre stage” at the event, said Lily Z. King, chief operating officer of Cobo.

The excitement also partially stems from active development of so-called layer-2 bitcoin projects, which are networks that run alongside the main blockchain to help it scale through faster transactions. Many crypto firms see this as an opportunity to boost demand for businesses built around bitcoin.

Spot ETFs are driving the most excitement, though, as it will give investors an easy way to expose themselves to bitcoin without needing to worry about managing cryptocurrency keys and storage.

Multiple people attending the event said they expect the Securities and Futures Commission (SFC) to approve spot bitcoin ETFs this month, following the approval of such funds in the US in January. Tencent News reported that the first batch could be announced as soon as April 15, with mainland Chinese fund managers Harvest International and China Asset Management Company (ChinaAMC) to be among the issuers.

The SFC recently approved Harvest and ChinaAMC to manage portfolios that invest more than 10 per cent in virtual assets, according to the regulator’s website.

Hong Kong regulators said in December that the city is prepared to allow retail access to ETFs that invest directly into cryptocurrencies and will start to authorise funds that offer such products.

Vitalik Buterin, co-founder of Ethereum, makes a brief last-minute appearance at the Hong Kong Web3 Festival to discuss new technical upgrades to the blockchain on April 9, 2024. Photo: SCMP / Matt Haldane

Apart from traditional investors, Hong Kong’s bitcoin spot ETFs will be attractive to “crypto native players” because Hong Kong’s regime is currently the only one in the world that allows in-kind subscriptions, said Marco Lim, managing partner at Hong Kong-based crypto hedge fund MaiCapital.

Under such arrangements, participating dealers can directly use bitcoin to subscribe to or redeem spot ETF shares, whereas in the US, these products can only be redeemed with dollars.

The introduction of spot bitcoin ETFs will be a “monumental stride” not only for the local market, but for the global perception of digital assets, said Cobo’s King. It represents a “significant leap” towards recognising cryptocurrencies as legitimate alternative assets and will pave the way for widespread adoption, she added.

Excitement is not just limited to bitcoin, though. Some at the Web3 Festival talked of the potential approval of spot ETFs for ether, the native token on the Ethereum blockchain. That is the other cryptocurrency that licensed exchanges can currently offer in Hong Kong.

That would make Hong Kong a first mover in the space, but it could be a harder sell for regulators. Some bitcoin ETF issuers in the US told CNBC this week that they expect the Securities and Exchange Commission to reject ether ETF applications.