Hong Kong monetary regulators are ready for spot crypto ETF functions

Hong Kong’s Securities and Futures Fee (SFC) and the Financial Authority (HKMA) introduced their readiness to just accept functions for spot crypto exchange-traded funds (ETFs) in a round launched on Dec. 22.

The regulators acknowledged:

“The SFC and the HKMA have reviewed their current coverage for intermediaries which want to interact in digital asset-related actions (VA-related actions). The coverage is up to date in gentle of the newest market developments, the place the SFC has authorised VA futures ETFs and is ready to just accept functions for the authorisation of different funds with publicity to digital belongings, together with digital asset spot exchange-traded funds (VA spot ETFs).”

This motion aligns with the latest pattern in Hong Kong in direction of embracing favorable laws for the crypto sphere. The Asian nation has proactively positioned itself as a crypto-friendly hub, introducing varied initiatives to foster development throughout the business.

Final month, StarCrypto reported that Julia Leung, the CEO of SFC, hinted that the regulator would think about permitting retail buyers to commerce spot crypto ETFs if these investments adjust to native laws.

Spot-based ETFs have garnered important consideration in latest months throughout the crypto group. Main monetary gamers like BlackRock and Grayscale have filed functions for a spot-based Bitcoin ETF with the U.S. Securities and Trade Fee (SEC).

Nonetheless, regardless of widespread optimism relating to these ETFs, the SEC has but to approve any software. As a substitute, the regulatory physique has postponed its resolution till the next yr.

SFC outlines regulatory measures for Hong Kong ETFs

A separate SFC round detailed the requirement for the regulator to contemplate approving an ETF software in Hong Kong.

Based on the regulator, transactions by the ETFs should happen via SFC-licensed crypto platforms or licensed monetary establishments that adjust to HKMA’s regulatory necessities.

The regulator additionally famous that it might allow each in-kind and in-cash subscription and redemption fashions for these spot ETFs.

On custodial necessities, the SFC specified that the fund’s trustee or custodian ought to solely delegate crypto custody capabilities to an SFC-licensed VATP or entities assembly the crypto custody requirements outlined by the HKMA.

For the valuation of those spot digital belongings, fund administration firms should implement an indexing technique reliant on the commerce quantity of digital belongings throughout outstanding buying and selling platforms.