Hong Kong actively checks the admission of crypto ETFs

The Securities and Futures Commission of Hong Kong is expected to enable the introduction of stock market-traded funds that pursue cryptocurrency futures for private investors, and refers to the increasing refinement of investor protection measures.

Julia Leung, deputy managing director and managing director of the SFC, said the regulatory authority was "actively based on the establishment of a regime for approval of ETFs that offer mainstream virtual assets for investors".

In the initial phase, the SFC ETFs will only allow to invest in Bitcoin futures and ether futures that are traded at the Chicago Mercantile Exchange, said Leung last week during her basic speech at the Hong Kong Fintech Week.

The latest notification is followed by a common circular from the SFC and Hong Kong Monetary Authority in January of this year, in which it is said that a "limited suite" of products associated with virtual assets could be approved for small investors in Hong Kong.

Leung described the existing requirement for professional investments for investments in crypto assets as the "elephant in the room" and found that the crypto-asset industry of the territory was still relatively new when the SFC introduced this requirement as part of its framework for virtual assets four years ago.

The SFC issued rules for virtual assets for the first time in November 2018, which limited access to virtual assets for professional investors due to the increased risks in connection with the investment class and the lack of regulation of certain platforms or managers in this area.

"In view of the novelty of our framework and the high volatility of crypto-assets, we thought it was wise to introduce a comprehensive restriction for 'professional investors'," she said.

However,

Hong Kong's crypto-asset ecosystem has made “considerable progress” in the past four years, since more and more global financial institutions and service providers enter this area and provided institutional infrastructure. During this time, the regulatory authority had gained more experience in regulating trading platforms for virtual assets and fund companies.

"We have been convinced that some initial concerns about futures ETFs have become manageable on virtual assets and can be addressed with adequate protective measures," said Leung.

"It is now a favorable time to check" only professional investors "," she added.

Richard Douglas, Hong Kong Chief Executive at Saxo Markets, said that the opening of crypto -based ETFs for local private investors would help Hong Kong to "restore his reputation as a financial center and to lure more talents into town after a few difficult years". .

The demand from private customers for crypto products was there, and Saxo checked, which could be "well suited" for private investors, said Douglas in a corporate declaration.

Gary Tiu, Executive Director of the Digital Assets Investment Firma BC Technology Group and Head of Regulatory Affairs, added that the rules to be relaxed in order to access private customers would encourage “animal-one-finance institutes to enter digital assets in Hong Kong Accelerate ”.

Leungs speech comes when the competing Asian financial and digital asset hub Singapore takes steps to take action against cryptocurrency providers after a relatively relaxed regulatory framework was created.

The Monetary Authority of Singapore has repeatedly warned of private investments in cryptocurrencies and worked on restricting the access of private customers to this asset class.

In January she published new guidelines that banishes of digital payment services almost all forms of public advertising outside of her own websites, mobile apps and social media accounts.

In contrast, the Australian supervisory authorities in the region have taken on a pioneering role in crypto ETFs for retail, with the first Bitcoin and ether-based products being launched in May.

fidelity was the first major global asset manager who offered a stock market traded in Hong Kong last week that is physically covered by Bitcoin, although the product is only available to professional investors.

"The crypto community has long believed that regulation inhibits innovations, the fintech development and thus the choice of investors restricted," said Leung from SFC in its fundamental speech.

However,

she added that this argument was questioned by the recent events in the field of cryptocurrencies, including the collapse of Luna and Terra in May and the subsequent bankruptcy of Three Arrows Capital.

"The excesses of certain crypto companies not only threaten their own well-being, but also that of investors and the entire crypto ecosystem," she argued, noticing that the entire market capitalization of crypto-assets from $ 3 trillion had now shrunk to 1 trillion dollar.

"The crypto winter has strengthened the determination of the global financial supervisory authorities to regulate crypto-asset service providers," she added.

Leung also announced that the regulatory authority is preparing to "adapt our regulatory reaction and to provide retail access to security token offers", provided certain safety precautions have been taken.