Hong Kong, known for its status as a major global financial centre, is actively exploring the possibility of launching exchange-traded funds (ETFs) that would directly invest in cryptocurrencies. This move is a key component of Hong Kong’s broader strategy to position itself as a leading hub for digital assets in the Asia-Pacific region, all while addressing the fallout from the JPEX scandal.
The competition to introduce cryptocurrency spot ETFs is in full swing.
Julia Leung, the CEO of Hong Kong’s Securities and Futures Commission (SFC), has disclosed that the city is exploring the potential of granting retail investors access to spot ETFs linked to cryptocurrencies, provided that regulatory concerns are effectively addressed.
Leung emphasized the welcoming of proposals that leverage innovative technology to enhance efficiency and customer experience. She also stressed the importance of establishing a robust regulatory framework, citing the JPEX incident as a reminder. While the SFC has taken steps to increase transparency in virtual asset exchange license applications, Leung did not comment on the ongoing police investigation related to JPEX.
By Hong Kong’s SFC digital-asset regulations, retail investors can presently trade major cryptocurrencies such as Bitcoin and Ether on licensed exchanges, notably through BC Technology Group Ltd.’s OSL and HashKey Exchange. Mandatory regulations for stablecoins are expected to be in place between 2023 and 2024.
Both Hong Kong and the United States allow futures-based crypto ETFs, although their adoption has been relatively limited compared to the broader fund industry. In Hong Kong, ETFs like Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures have been listed, with a combined asset value of approximately $65 million.