Hong Kong’s Securities and Futures Fee (SFC) has expressed its readiness to think about purposes for spot crypto exchange-traded funds (ETFs).
The SFC and the Hong Kong Financial Authority (HKMA) have issued a joint circular addressing the growing curiosity in launching spot crypto ETFs. Whereas the SFC had beforehand allowed licensed crypto suppliers to supply cryptocurrency futures ETFs in Hong Kong, spot ETFs had not been granted related permission.
Nevertheless, the SFC has now said that it’s “ready to simply accept purposes for the authorization of different funds with publicity to cryptocurrencies,” together with spot crypto ETFs.
With the collaboration of the 2 regulators, the SFC said that it had reviewed its coverage for intermediaries concerned in digital asset-related actions. The SFC is now able to obtain purposes for the authorization of assorted funds, together with Digital Asset Spot exchange-traded funds (VA spot ETFs), alongside present crypto futures ETFs.
The regulatory strategy in Hong Kong has developed, departing from the “professional-investors-only” framework established in 2018. The SFC up to date its guidelines in October to broaden investor participation in spot crypto and ETF investing.
In a round issued on December 22, the SFC outlined criteria for funds to “immediately spend money on similar spot Digital Asset (VA) tokens accessible to the Hong Kong public on SFC-licensed Digital Asset Buying and selling Platforms (VATPs).” The SFC emphasised that cryptocurrency transactions performed by these ETFs should happen by way of SFC-licensed crypto platforms or licensed monetary establishments.
The up to date pointers by the SFC enable for each in-kind and in-cash subscription and redemption processes. Administration corporations are required to switch cryptocurrencies to the custody accounts of SFC-authorized suppliers, whether or not held regionally or abroad.
To find out the valuation of spot ETFs, administration corporations are suggested to undertake an indexing strategy, counting on commerce quantity knowledge from main crypto buying and selling platforms. Additionally they added that funds planning to have crypto publicity exceeding 10% of their web asset worth should endure prior session with the SFC.
They state that the SFC is prepared to accept applications for the authorization of funds with publicity to digital belongings, together with digital asset spot exchange-traded funds (VA spot ETFs).
Hong Kong Emerges as Crypto Hub Amid International Regulatory Shifts, Attracting Over 11% of International VC Funding within the Sector
In distinction to the widespread crackdown on cryptocurrency actions in mainland China, Hong Kong has proven openness to crypto corporations, actively encouraging collaboration with banks all year long.
Hong Kong’s growing significance within the blockchain and crypto sectors is notable, with over 11% of world enterprise capital funding within the trade directed towards enterprises in Hong Kong and Singapore. This marks a major rise from the two% allocation noticed in 2021.
The shift in funding is attributed to numerous elements, together with challenges confronted by the FTX crypto change, prompting strategic reassessments by U.S.-based crypto corporations.
In October 2022, Hong Kong issued coverage statements on cryptocurrencies to bolster its standing as a global financial hub. In June, the town launched its crypto licensing system for digital asset buying and selling platforms, permitting licensed exchanges to supply retail buying and selling providers.
This announcement coincides with hypothesis that the U.S. Securities and Alternate Fee (SEC) might approve a spot bitcoin ETF within the early weeks of the upcoming 12 months.