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FameEX Hot Topics | Hong Kong Regulatory Authority Set to Greenlight In-Kind Spot Bitcoin ETFs
2023-12-28 16:43:25
Hong Kong's financial regulatory body, the Securities and Futures Commission (SFC), is taking significant strides in the regulation of spot bitcoin exchange-traded funds (ETFs), setting a distinct path from the U.S. Securities and Exchange Commission (SEC). On December 22, the SFC released a circular detailing guidelines for funds with substantial exposure to virtual assets (VAs), laying the groundwork for the authorization of investment funds for public offerings in Hong Kong, especially those with over 10% exposure to VAs.
This move by the SFC is a response to the dynamic and rapidly changing landscape of virtual assets and the increasing popularity of crypto ETFs among both retail and professional investors. Recognizing the growing local demand for such products, the Hong Kong regulator is implementing regulatory frameworks to facilitate public offerings of VA products, with a strong emphasis on investor protection.
Previously, in October, the SFC began accepting ETF applications focused on crypto assets through futures contracts. By June 2023, the SFC had established a licensing regime for virtual asset trading platforms (VATPs), allowing Hong Kong investors to directly access major spot virtual assets, subject to certain eligibility and stringent investor protection safeguards. The SFC requires that transactions and acquisitions of spot crypto by SFC-authorized funds be conducted through crypto trading platforms licensed by the SFC or through financial institutions authorized by the Hong Kong Monetary Authority (HKMA), ensuring adherence to established regulatory standards. Contrasting with the U.S. SEC's preference for the cash creation model in spot bitcoin ETFs, Hong Kong is adopting a more flexible approach, permitting both cash and in-kind creation models for these ETFs. This policy divergence highlights Hong Kong's forward-thinking and adaptive approach to the evolving world of cryptocurrency investments. On the other hand, the U.S. SEC has imposed a stringent deadline for spot bitcoin ETF applicants to amend their filings, slated for early January consideration. This reflects the SEC's cautious stance on cryptocurrency ETFs and their potential impact on the wider financial markets. Hong Kong's regulatory developments in spot bitcoin ETFs underscore the city's dedication to nurturing a progressive and well-regulated cryptocurrency market. By allowing both cash and in-kind models, Hong Kong is positioning itself as a prominent financial center in the digital asset sphere, offering a regulated avenue for cryptocurrency investments. This significant development in cryptocurrency regulations not only marks a key milestone for Hong Kong but could also set a precedent for other global jurisdictions in their approach to digital asset ETFs. Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.
