The Hong Kong arm of Harvest Fund Management, a major Chinese asset manager, reportedly submitted an application for a spot bitcoin exchange-traded fund (ETF) on Friday to the local financial regulator, as Hong Kong appears to get ready for its first batch of spot cryptocurrency ETFs soon.

Tencent News reported today that Harvest has submitted its application for a spot Bitcoin ETF to the Securities and Futures Commission, hoping to launch the city's first such ETF after the Lunar New Year holiday, which falls on Feb. 10 this year.

Harvest and the SFC did not immediately respond to The Block’s request for comment.

Earlier this month, Livio Weng, chief operating officer of Hong Kong crypto exchange HashKey, said that around 10 fund companies have started looking into launching potential spot crypto ETFs in the city.

Hong Kong-based Venture Smart Financial Holdings Ltd. (VSFG) said it aims to launch its spot bitcoin ETF within the first quarter, according to Bloomberg.

Growing interest in stablecoins

Meanwhile, with Hong Kong stepping up efforts to push for stablecoin rules, several companies — including Harvest Global Investments, RD Technologies and VSFG — have shown interest in stablecoin-related trials, Bloomberg reported today.

These firms are in discussions with the Hong Kong Monetary Authority, the city’s de facto central bank, about potential stablecoin trials, according to the report, citing sources familiar with the matter.

Sean Lee, senior advisor and head of stablecoin at VSFG, told The Block that the company expects the stablecoin sandbox process to commence in the first quarter, with the duration lasting through the first half of 2024.

“VSFG is dedicated to supporting Hong Kong as an international virtual asset center, and our dedicated division, IDA, will be applying for sandbox inclusion along with our consortium partners to demonstrate the potential of programmable digital money while fulfilling prudential requirements,” Lee said.

An HKMA spokesperson told The Block that the sandbox arrangement is intended for fiat-reference stablecoin (FRS) issuers “who have a genuine interest in and a reasonable plan on issuing FRS in Hong Kong.”

“The HKMA is preparing for the launch of the sandbox and will announce relevant details in due course,” the spokesperson added.

Harvest and RD Technologies have yet to respond to The Block’s inquiries.

In December, the HKMA said in a joint consultation paper with the Financial Services and the Treasury Bureau that a stablecoin issuer would be required to obtain a license from the authorities “if it issues a stablecoin that references the value of one or more fiat currencies in Hong Kong.”

Eddie Yue, chief executive of the HKMA, said at the time that stablecoins could “become the interface between traditional finance and the virtual asset market.”

“In a scenario where stablecoins become one of the preferred payment options by the general public, we should reasonably expect further integration between the digital payment ecosystem and the real economy, and whether the stablecoin is indeed ‘stable’ will then become ever more important,” Yue said in a December statement. 

Updates: Added comments from the HKMA and VSFG