Hong Kong SFC is Ready to Welcome Spot Crypto ETF Applications

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Hong Kong has recently signaled its preparedness to embrace the world of cryptocurrency exchange-traded funds (ETFs). This was made known in a published joint circular from the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority, the city’s de facto central bank. 

As per the publication, both regulators have reviewed the nation’s policy for players involved in virtual-asset-related activities.

Consequently, Hong Kong will now welcome applications from traditional financial firms looking to create exchange-traded funds that track spot-based cryptocurrencies. This is in addition to existing crypto futures ETF.

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SFC Shares Guidelines for Spot Crypto ETFs

In a separate circular, the SFC outlined a series of guidelines required for issuing spot ETFs. As per the circular, crypto transactions carried out by these ETFs can only be done on SFC-approved platforms or authorized financial institutions.

In matters of custody, the SFC stated that the fund’s trustee or custodian should only assign its crypto custody responsibilities to an SFC-licensed VATP or to entities that comply with the crypto custody standards set by the HKMA.

Notably, the announcement underscores the city’s commitment to becoming a hub for digital asset innovation and financial technology. The decision also reflects a recognition of the growing importance and acceptance of digital assets in the global financial landscape. 

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Hong Kong Positions Itself as a Forward-thinking Financial Center

Spot crypto ETFs, which are investment vehicles that track the real-time prices of cryptocurrencies, have gained traction as a means for traditional investors to gain exposure to the crypto market without directly holding the digital assets. Hong Kong’s move is poised to attract both local and international players looking to participate in the evolving crypto investment landscape.

By expressing its readiness to accept spot crypto ETF applications, Hong Kong is positioning itself as a forward-thinking financial center that embraces technological advancements. Meanwhile, the regulatory framework surrounding crypto ETFs is a critical aspect of this development. As such, Hong Kong’s move indicates a willingness to establish clear guidelines and regulations to ensure the proper functioning and oversight of these financial instruments.

Hong Kong Permit Retail Access to Spot Crypto ETFs

Recall that last month, Hong Kong’s SFC announced it is considering granting retail investors direct access to spot ETFs that focus on cryptocurrencies. Julia Leung, CEO of the SFC said that the move towards allowing retail investors to buy spot crypto ETFs aligns with broader global trends, where traditional financial institutions acknowledge the significance of cryptocurrencies.

It is worth mentioning that Hong Kong took the first position as a digitally ready economy according to a readiness report. Also, the government has been looking for means to bring back blockchain investors who ran away from the country due to strict policies that were in place to regulate the virtual economy.

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