Hong Kong and Thailand Approved Crypto ETFs: Who Is Next in Asia?

Asia is one of the biggest crypto markets on the earth, among the European Union and the USA. Hong Kong became the first jurisdiction on this continent to approve Bitcoin and Ethereum ETF.

Regulators can give investors access to Bitcoin and Ethereum ETFs in two ways. The first option is to allow qualified investors to invest in foreign Bitcoin ETFs, which Thailand already did in March of this year. And recently, Thailand approved a local Bitcoin ETF in May.

Let's talk about a few more countries in the region where ETF approval may affect the overall crypto market capitalization. It looks like the most prospective countries for crypto ETF approval now are South Korea, Taiwan, and maybe Japan and Singapore.

South Korea

This country has a wide level of crypto adoption. Just one fact to mention - in the first quarter of this year, the Korean Won was leading in crypto to fiat trading volume on centralized exchanges ($456 bln), it has even surpassed the US dollar ($445 bln).

Despite that, this January, the local regulator rejected local Bitcoin ETFs. But the situation changed in April - then, the Democratic party declared ETF approval as a part of its сampaign - and this party won elections in the local parliament. However, crypto ETF approval in South Korea at least needs some legislative actions based on local experts.

Also, there is a sign that Korea continues to tighten crypto regulations - local regulator FSC is tightening its approach to the NFT. With this in mind, it is still not very clear how the ruling party will fulfill its promises if the regulator has a different stance. At least don't count on the rapid adoption of Bitcoin ETFs in Korea, although it is quite possible in the medium term

In July, the Korean Act on the Protection of Virtual Asset Users will come into power. The new ruling party has just gained control of the parliament, so we'll have to wait to see how their approach to crypto regulation changes after the election.

Japan

The adoption of Bitcoin ETFs is a gradual process - one indication that it is likely is the regulator's loyalty to the purchase of Bitcoin by large publicly traded companies. This is what Microstrategy did in the US, and now Metaplanet is doing it in Japan - it has publicly disclosed its Bitcoin savings. The stock price jumped 127% for 1 week in May. Metaplanet's rise is a sure sign of demand in Japan for a Bitcoin ETF counterpart before it officially exists.

The approval of Japan's own bitcoin ETFs is still on the table. As in Thailand, Japanese stock exchanges need regulatory approval to make U.S. Bitcoin ETFs available. And there's no information yet to make it happen.

But the growing demand and high elaboration of crypto regulation in the country, and competition with other Asian exchanges, primarily with Hong Kong, may push the process this year.

Taiwan

Approval of crypto ETFs as investing products in Taiwan is likely to happen in 2024, but still stays uncertain. Currently, this jurisdiction still has some gaps in its crypto regulations for VASPs and AML. New rules for crypto probably will be presented only in September 2024. Any decisions on crypto spot ETFs for the local market will probably be delayed up to this date.

However, currently in Taiwan, it’s already possible to buy US crypto ETFs for residents of Taiwan using local brokers. But there has yet to be a resolution from the local regulator on this. Last but not least, the Taiwanese ETF market is now booming with more than $123 bln in capitalization. This means that regulators have a relatively innovative approach to crypto regulations and can approve crypto ETFs, too.

Singapore

The approval of Bitcoin ETFs in Singapore depends on the local finance regulator, the Monetary Authority of Singapore (MAS). This March, the regulator published a notice stating that it doesn't want to give retail investors access to crypto ETFs. Local brokers follow this approach, either giving access to US spot Bitcoin ETFs for retail investors with special notice or not giving it at all.

At the same time, Singapore has a significant demand for Bitcoin ETFs. Based on an Independent Reserve survey this March, about one-third of locals would like to invest in Spot Bitcoin ETF.

So Singapore likely won't be the next jurisdiction according to the position of the local authorities, but again, the high activity of crypto asset lobbyists and the level of adopting institutional investors is forcing regulators to accelerate.

UAE

The United Arab Emirates has a good crypto regulation framework and may be classified as a crypto offshore of Asia. At the same time, there is no evidence that this jurisdiction plans to introduce Bitcoin ETFs this year. But there is a high demand for it - according to Bitget research, 72% of local users are interested in cryptocurrencies.

So currently in Dubai, there are available crypto futures derivatives, but not ETFs. Also, local regulators need a clear policy about Bitcoin ETFs.

Next Wave: India and Other Large Economies?

India and Indonesia are the only countries in the world, which imposed tax on crypto transactions and basically have an unfavorable approach to crypto regulation. At the same time, these countries have a relatively high level of stock market capitalization. Moreover, in India, local investors have a right to invest outside a country up to $250,000 per year and purchase securities. They already can invest in foreign crypto ETFs by this rule.

So probably after leading in fintech innovation countries like South Korea, Japan, Singapore, and others approve Bitcoin ETF, India may join. Also, there's a chance that mainland China will get access to crypto ETFs at some point.

Roughly, the same can be said about the positions of regulators in the Philippines and most Arab Asian countries - they will see how ETFs trade in other jurisdictions in the region and only then join. Probably these jurisdictions won't approve any crypto ETFs in 2024.

Conclusion

With the growing demand for crypto in most of the major economies in Asia, we can likely wait for crypto ETF approval in South Korea and 2-3 more Asian jurisdictions this year. The main reason why this can happen - the presence of ETFs in other countries such as the US and Hong Kong.

The absence of Bitcoin ETFs on local exchanges will provoke an outflow of crypto investors' funds to jurisdictions where such investment instruments are legal