Hong Kong Regulator Considers Approving Crypto Spot ETFs
Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), is exploring the possibility of approving crypto spot exchange-traded funds (ETFs). This move indicates a potential shift in the regulatory landscape in the region. The SFC and the Hong Kong Monetary Authority (HKMA) have released a joint circular, acknowledging the increasing interest in launching spot crypto ETFs.
While the SFC has already granted permission for licensed crypto providers to offer cryptocurrency futures ETFs in Hong Kong, it has not done the same for spot ones. However, this time, the SFC has stated that it is willing to accept applications for other funds with exposure to cryptocurrencies, including spot crypto ETFs.
“The SFC and the HKMA have reviewed their existing policy for intermediaries which wish to engage in virtual asset-related activities. The policy is updated in light of the latest market developments, where the SFC has authorized virtual asset futures ETFs and is prepared to accept applications for the authorization of other funds with exposure to virtual assets, including virtual asset spot exchange-traded funds.”
– The Securities and Futures Commission
Facilitation of In-Kind and In-Cash Subscription and Redemption Processes
In its updated guideline, the SFC has approved both in-kind and in-cash subscription and redemption processes for spot ETFs. Management companies are required to transfer cryptocurrencies held locally or overseas to custody accounts provided by SFC-authorized providers. To determine the valuation of spot ETFs, management companies are advised to adopt an indexing approach based on trade volume data from major crypto trading platforms.
Rise in Venture Capital Funding for Hong Kong and Singapore Crypto Enterprises
Analysts at PitchBook have reported that over 11% of global venture capital funding in the blockchain and crypto sector was allocated to enterprises based in Hong Kong and Singapore. This marks a significant increase from the previous year’s 2% allocation. The shift in funding flow was influenced by factors such as the collapse of FTX crypto exchange and resulting bankruptcies, which prompted strategic reassessments by many US-based crypto companies.
Hot Take: Hong Kong Considers Approving Crypto Spot ETFs
Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), is open to the possibility of approving crypto spot exchange-traded funds (ETFs). While the SFC has already authorized cryptocurrency futures ETFs, it has yet to do the same for spot ones. However, a recent joint circular from the SFC and the Hong Kong Monetary Authority (HKMA) indicates a potential shift in their stance. The updated guideline allows for both in-kind and in-cash subscription and redemption processes for spot ETFs. Additionally, there has been a notable increase in venture capital funding for blockchain and crypto enterprises based in Hong Kong and Singapore, signaling growing interest in the region’s crypto industry.
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