The Hong Kong branch of Harvest Fund Management, a prominent Chinese asset management company, reportedly applied for a spot bitcoin exchange-traded fund (ETF) with the local financial regulatory body on Friday, indicating Hong Kong's potential move towards its initial group of spot cryptocurrency ETFs.

According to Tencent News, Harvest submitted its spot Bitcoin ETF application to the Securities and Futures Commission, aiming to introduce the city's inaugural ETF of this kind post the Lunar New Year holiday, scheduled for Feb. 10 this year.

Both Harvest and the SFC have not yet responded to requests from The Block for comments.

Earlier this month, Livio Weng, the chief operating officer of Hong Kong's HashKey crypto exchange, mentioned that approximately 10 fund firms have initiated explorations into launching potential spot crypto ETFs in the city.

Venture Smart Financial Holdings Ltd. (VSFG), based in Hong Kong, revealed plans to unveil its spot bitcoin ETF within the first quarter, as reported by Bloomberg.

Rising Interest in Stablecoins

Simultaneously, as Hong Kong intensifies its efforts to establish stablecoin regulations, multiple companies, including Harvest Global Investments, RD Technologies, and VSFG, have expressed interest in stablecoin-related trials, as per a Bloomberg report today.

These companies are engaging in discussions with the Hong Kong Monetary Authority (HKMA), the city's de facto central bank, regarding potential stablecoin experiments, according to sources familiar with the matter cited in the report.

Sean Lee, senior advisor and head of stablecoin at VSFG, informed The Block that the company anticipates the commencement of the stablecoin sandbox process in the first quarter, with the duration extending through the first half of 2024. "VSFG is committed to supporting Hong Kong as an international virtual asset hub, and our dedicated division, IDA, will be applying for sandbox inclusion along with our consortium partners to showcase the potential of programmable digital money while fulfilling prudential requirements," Lee stated.

An HKMA spokesperson informed The Block that the sandbox arrangement is targeted at 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 not responded to inquiries from The Block yet.

In December, the HKMA stated in a joint consultation paper with the Financial Services and the Treasury Bureau that a stablecoin issuer would necessitate obtaining 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, remarked 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 mentioned in a December statement.