Hong Kong-based Harvest Fund Management has applied for permission to launch the city's first Bitcoin-focused ETF. Hong Kong regulators have already expressed their readiness to consider such applications after the approval of several funds in the United States.

ETFs are expected to offer a regulated route to investment in digital assets, promising benefits such as creating orderly markets for the asset class, strengthening investor protection and bringing digital asset platforms closer to traditional financial institutions.

However, challenges arise in the form of fee structures and regulatory compliance. With a limited number of licensed crypto exchanges in Hong Kong, there is pressure to maintain reasonable fees.