According to local media reports on April 8, leading Chinese mutual funds are actively investigating Bitcoin exchange-traded funds (ETFs) through their subsidiaries in Hong Kong. Adoption is expected to commence in the second quarter pending regulatory approval, marking a significant shift towards crypto investment among regional firms that have refrained from digital assets following China's ban on Bitcoin mining and crypto activities in 2021.

Reports indicate that subsidiaries of Jiashi Fund and Southern Fund are leading the charge in embracing Bitcoin ETFs and have already submitted regulatory applications. Jiashi Fund aims to launch a Bitcoin spot ETF, while Huaxia Fund's subsidiary recently collaborated with Bitcoin ETF custodian HashKey. Both entities are awaiting regulatory clearance to proceed further.

Top mutual funds are leveraging their Hong Kong branches to diversify their investment portfolios into digital assets amidst the evolving stance in the city-state. These firms are reportedly seeking Bitcoin licenses in Hong Kong to leverage the regulatory framework provided by the jurisdiction.

Insiders suggest that spot Bitcoin ETFs could debut by the second quarter, with Hong Kong facilitating the creation and redemption of these products for Chinese companies. Southern Fund's subsidiary made waves in December 2022 by introducing Asia's inaugural crypto ETFs, establishing the Hong Kong stock market as a direct provider of Bitcoin and Ethereum futures ETFs.

The performance and market presence of Bitcoin ETFs have motivated more mutual funds to enter the emerging field. For instance, Southern Fund's futures Bitcoin ETF, launched at the end of 2022, has delivered impressive gains, with a 134% increase in value in 2023.

Regulatory authorities in Hong Kong have expressed commitment to fostering the responsible and stable development of the digital assets industry. The region has emerged as a hub for over 220 Web 3 companies. The recent surge in Bitcoin's price to new highs has further bolstered the confidence of fund companies in exploring spot ETFs, with the cryptocurrency's market capitalization surpassing $1.3 trillion.