Hong Kong Regulator Opens Door for Spot Crypto ETFs Investment

Hong Kong Ready To Welcome Spot Crypto ETFs

On Dec. 22, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority, the city’s de facto central bank, announced that they are ready to receive applications for the authorization of various funds, including Virtual Asset Spot exchange-traded funds (VA Spot ETFs).

The SFC also outlined the criteria for funds to “directly invest in identical spot Virtual Asset (VA) tokens available to the Hong Kong public on SFC-licensed Virtual Asset Trading Platforms (VATPs).”

In preparation for the launch of China AI reporter tokens and Web 3.0, Hong Kong is getting ready to accept applications for ETFs that will invest in spot crypto. The SFC and the HKMA have reviewed their policy regarding intermediaries involved in virtual asset-related activities.

The SFC has also specified the requirements for funds to invest in spot Virtual Asset tokens that are available to the public on SFC-licensed Virtual Asset Trading Platforms.

Cryptocurrency Regulations in Hong Kong

The Securities and Futures Commission (SFC) has outlined the requirements for cryptocurrency exchange-traded funds (ETFs). Transactions must occur through SFC-licensed crypto platforms or authorized financial institutions, and in-kind or in-cash subscriptions and redemption are allowed for SFC-authorized spot Virtual Asset (VA) ETFs.

The fund’s trustee or custodian must delegate its crypto custody function to an SFC-licensed Virtual Asset Trading Platform (VATP) or those meeting the crypto custody standards set by the Hong Kong Monetary Authority (HKMA). Moreover, the fund’s management companies should adopt an indexing approach based on VA trade volume across major VA trading platforms for spot virtual asset valuation. If the fund’s crypto exposure exceeds 10% of its net asset value, prior consultation with the SFC is necessary.

In stark contrast to mainland China’s crackdown on cryptocurrency activities, Hong Kong has been actively encouraging collaboration with banks this year.

In October 2022, Hong Kong issued policy statements on cryptocurrencies to boost its standing as a global financial hub. In June, the city launched its crypto licensing system for virtual asset trading platforms, allowing licensed exchanges to provide retail trading services.

In order to further its status as a major financial center, Hong Kong released statements on cryptocurrencies in October 2022. In June, the city initiated its crypto licensing system, allowing for the provision of retail trading services through licensed exchanges.

In October 2022, Hong Kong issued policy statements on cryptocurrencies with the aim of reinforcing its position as a leading financial hub. The city also established a crypto licensing system for virtual asset trading platforms in June, enabling licensed exchanges to provide retail trading services.