Hong Kong signals willingness to greenlight crypto spot ETFs

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Hong Kong’s securities regulator is exploring the potential for approving crypto spot ETFs, signaling a possible shift within the regulatory panorama within the area.

The Securities and Futures Fee (SFC) and the Hong Kong Financial Authority (HKMA) have published a joint circular, noting a rising variety of inquiries serious about launching spot crypto exchange-traded funds (ETFs).

Whereas the SFC has granted permission for licensed crypto suppliers to supply cryptocurrency futures ETFs in Hong Kong, the regulator hasn’t made the identical transfer for spot ones. Nonetheless, this time, the SFC has said that it’s “ready to just accept functions for the authorization of different funds with publicity to cryptocurrencies,” together with spot crypto ETFs.

“The SFC and the HKMA have reviewed their present coverage for intermediaries which want to interact in digital asset-related actions. The coverage is up to date in mild of the most recent market developments, the place the SFC has approved digital asset futures ETFs and is ready to just accept functions for the authorization of different funds with publicity to digital property, together with digital asset spot exchange-traded funds.”

The Securities and Futures Fee

The SFC has authorized within the updated guideline the facilitation of each in-kind and in-cash subscription and redemption processes, emphasizing that administration corporations should switch cryptocurrencies, whether or not held regionally or abroad, to the custody accounts of SFC-authorized suppliers. To find out the valuation of spot ETFs, administration corporations are suggested to undertake an indexing strategy, counting on commerce quantity information sourced from main crypto buying and selling platforms, with out specifying them.

In early December, analysts at PitchBook revealed that greater than 11% of world enterprise capital funding within the blockchain and crypto sector was directed in direction of enterprises based mostly in Hong Kong and Singapore, signifying a considerable enhance from the meager 2% allocation noticed in 2021. As per PitchBook, the shift in money movement was influenced by numerous elements, notably the collapse of Sam Bankman-Fried’s FTX crypto trade. The ensuing ripple impact of bankruptcies compelled many crypto corporations based mostly within the U.S. to conduct strategic reassessments, the agency added.

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