The global financial landscape is rapidly evolving with the integration of digital assets into traditional investment vehicles. Following the U.S. Securities and Exchange Commission’s approval of 11 spot Bitcoin ETFs on January 10, 2025, Hong Kong is making significant strides in embracing cryptocurrency-based exchange-traded funds (ETFs). The Securities and Futures Commission (SFC) is accelerating its review process for the first spot Bitcoin ETF, with plans to list it on the Hong Kong Stock Exchange after the Lunar New Year.
This article explores the regulatory framework for Bitcoin futures ETFs in Hong Kong, examines existing virtual asset ETF offerings, compares tax treatments for investors in Hong Kong and Singapore, and analyzes the future outlook for spot Bitcoin ETFs in Asia’s leading financial hub.
Regulatory Framework for Bitcoin Futures ETFs in Hong Kong
In October 2022, the Hong Kong government released a policy statement supporting the development of a vibrant virtual asset ecosystem. Subsequently, the SFC issued guidelines for virtual asset futures ETFs. These were updated in December 2023 with the Circular on SFC-Authorised Funds Investing in Virtual Assets, which set clear standards for public funds allocating more than 10% of assets to digital tokens.
Key Issuer Requirements
To launch a compliant Bitcoin futures ETF, fund managers must meet stringent criteria:
- Management资质: Fund managers must hold an upgraded Type 9 license under the Securities and Futures Ordinance and have at least one team member with direct experience in managing virtual asset portfolios.
- Custody Standards: Digital assets must be held by SFC-approved platforms or financial institutions. Custodial arrangements require full segregation from the manager’s own accounts, with the majority of holdings stored in cold wallets. Private keys must be secured within Hong Kong and protected against cyber threats.
- Service Providers: All third-party vendors—including index providers, market makers, and administrators—must meet SFC standards for reliability and compliance.
Investment and Risk Management Rules
The SFC mandates that futures-based ETFs maintain sufficient liquidity and manage roll costs effectively. Funds must adopt active strategies that diversify across contract maturities and include robust plans for market disruptions. Notably, leverage is prohibited at the fund level, ensuring investor protection.
Valuation of underlying assets must rely on reputable benchmark indices reflecting real-time spot market activity. Additionally, issuers are required to conduct comprehensive investor education and disclose risks transparently in all offering documents.
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Current Bitcoin Futures ETFs Available in Hong Kong
As of early 2025, three Bitcoin futures ETFs are listed on the Hong Kong Stock Exchange:
Southern Asset Management Bitcoin Futures ETF (3066.HK)
Launched on December 16, 2022, this was Hong Kong’s first Bitcoin futures ETF. It tracks CME Group’s Bitcoin futures contracts and has a minimum investment of 100 units. As of February 1, 2025, it manages $30.8 million in assets with a net asset value (NAV) of $2.2175 per unit. The fund has delivered a 131% return since inception and charges a management fee of 1.99% annually.
Southern Asset Management Ethereum Futures ETF
Also launched on December 16, 2022, this Ethereum-focused ETF tracks CME Ethereum futures. With $12.09 million in AUM and a NAV of $1.6709, it offers exposure to the second-largest cryptocurrency. Its one-year return stands at 80.16%, outperforming many traditional tech funds.
Samsung Bitcoin Futures ETF
Listed on January 13, 2023, this ETF has a lower entry barrier—just 50 units—and charges a competitive management fee of 0.89%. Despite its smaller size ($10.14 million AUM), it has achieved a 96.7% return since launch.
These products reflect growing institutional confidence in crypto derivatives, though their total assets remain modest compared to U.S.-listed peers.
Tax Treatment for Hong Kong and Singapore Investors
Understanding tax obligations is crucial when investing in crypto-linked ETFs.
For Hong Kong Residents
Hong Kong follows a territorial tax system—only income sourced within Hong Kong is taxable. Capital gains from selling ETFs are generally not subject to profit tax for individuals. However, frequent trading may be deemed a business activity, triggering taxation.
Dividends from ETFs are typically tax-free for both individuals and corporations. Corporate investors face profit tax rates of 8.25% on the first HK$2 million and 16.5% thereafter if gains are classified as trading income.
For Singapore Residents
Singapore also exempts capital gains from taxation. However, short holding periods may lead authorities to treat profits as business income, subject to personal income tax ranging from 0% to 24%.
While dividends from Hong Kong ETFs are not subject to withholding tax, Singaporean investors must declare foreign-sourced income if it is remitted to Singapore. Resident companies may qualify for tax exemption on overseas dividends if the source country imposes a corporate tax rate of at least 15% and the income has already been taxed abroad.
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The Rise of Spot Bitcoin ETFs in Hong Kong
While futures-based ETFs dominate today’s market, the future lies in spot Bitcoin ETFs, which directly hold Bitcoin rather than derivatives.
In December 2024, the SFC and HKMA announced they were ready to accept applications for spot ETFs—positioning Hong Kong as Asia’s first major market to approve such products. On January 26, 2025, Harvest Fund Management became the first firm to submit an application.
Although no other filings have been confirmed yet, industry leaders like Southern Asset Management are actively engaging with regulators. If approved, these funds could launch shortly after Chinese New Year, potentially mirroring the U.S. model by authorizing multiple issuers simultaneously.
Spot ETFs offer several advantages:
- Direct exposure to Bitcoin price movements
- Enhanced transparency and regulatory oversight
- Lower tracking error compared to futures-based funds
- Greater appeal to long-term institutional investors
Their introduction marks a pivotal moment in bridging traditional finance with decentralized digital assets.
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Frequently Asked Questions (FAQ)
Q: Can mainland Chinese investors buy Hong Kong Bitcoin ETFs?
A: No. Under current regulations, virtual asset products—including ETFs—are prohibited from being sold directly or indirectly to mainland individuals or entities without prior government approval.
Q: Do I need special qualifications to invest in a Bitcoin ETF in Hong Kong?
A: No professional certification is required. Any investor with access to a Hong Kong brokerage account can purchase listed ETFs, provided they meet minimum unit requirements.
Q: Are Bitcoin ETFs safer than buying crypto directly?
A: Yes. ETFs provide regulated exposure without the need to manage private keys or use exchanges, reducing counterparty and custody risks.
Q: Will spot Bitcoin ETFs replace futures-based ones?
A: Not immediately. Futures ETFs will remain relevant for hedging and speculative strategies, but spot ETFs are expected to attract larger inflows due to their structural advantages.
Q: How are Bitcoin ETF prices determined?
A: Prices are based on the net asset value (NAV) derived from underlying futures contracts or spot holdings, adjusted for market supply and demand during trading hours.
Q: Are there plans for Ethereum spot ETFs in Hong Kong?
A: While no formal applications have been announced, regulators have indicated openness to expanding beyond Bitcoin, especially as Ethereum’s regulatory clarity improves globally.
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