[NEWS] Hong Kong financial regulator to begin accepting applications for cryptocurrency spot ETF

In a joint statement on the 22nd, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) said they are ready to accept applications for crypto spot ETFs.

In their statement, the SFC and HKMA noted that both organizations have updated their current policies on crypto spot ETFs. They continued that the crypto environment has evolved since the SFC imposed the "professional only" restriction in 2018.

The SFC said it will now accept applications for approval of a range of ETFs, including crypto spot ETFs and existing crypto futures ETFs.

In their statement, they said, "The SFC and HKMA have reviewed their existing policies for intermediaries wishing to carry out activities related to crypto assets. The updated policy reflects the latest market developments, including the SFC's approval of VA futures ETFs and our readiness to accept applications for other funds with exposure to crypto assets, such as crypto spot exchange-traded funds (VA spot ETFs)," indicating a positive stance on the approval of crypto spot ETFs.

In a separate statement, the SFC mentioned the fund’s criteria as “directly investing in the same cryptocurrency physical tokens available to Hong Kong citizens on SFC-approved virtual currency trading platforms (VATP).”

SFC-designated cryptocurrency transactions conducted through ETFs must be conducted through platforms with SFC licenses or licensed financial institutions.

The SFC further stated that the trustee or custodian of the fund should only delegate custody functions to cryptocurrency trading platforms that have obtained SFC licenses or that meet the custody standards set by the HKMA.

Cryptocurrency physical ETFs being considered, led by the US

As expectations grow that a Bitcoin physical ETF will be launched in the US as early as next year, Hong Kong is also joining the trend. HSBC Hong Kong recently expanded its support for Bitcoin (BTC) and Ethereum (ETH) futures ETFs. And UBS Group announced that it will allow some of its Hong Kong clients to trade cryptocurrency-linked ETFs.

Cryptocurrency prices are on the rise on the expectation that the SEC (Securities and Exchange Commission) will allow the approval of Bitcoin spot ETFs.

Asset management companies such as BlackRock, Fidelity, and Grayscale have already submitted applications. They have since held further discussions with the SEC and have revised their applications to address concerns about spot ETFs. Some have pointed out that the SEC is making them revise their applications to allow these applications.

There is also a national policy to make Hong Kong a cryptocurrency hub. Hong Kong describes itself as a "cryptocurrency-friendly country" and has taken various initiatives to promote the growth of the cryptocurrency industry.

Last month, SFC CEO Julia Leung suggested that regulators may allow retail investors to trade cryptocurrency spot ETFs if they comply with local regulations.

Reference: Announcement
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