Hong Kong financial regulators are prepared for spot crypto ETF applications

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 circular launched on Dec. 22.

The regulators said:

“The SFC and the HKMA have reviewed their present coverage for intermediaries which want to have interaction in digital asset-related actions (VA-related actions). The coverage is up to date in mild of the most recent 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 recent trend in Hong Kong in direction of embracing favorable rules for the crypto sphere. The Asian nation has proactively positioned itself as a crypto-friendly hub, introducing numerous initiatives to foster progress inside the business.

Final month, CryptoSlate 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 rules.

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

Nevertheless, regardless of widespread optimism relating to these ETFs, the SEC has but to approve any utility. As an alternative, the regulatory physique has postponed its determination till the next yr.

SFC outlines regulatory measures for Hong Kong ETFs

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

In line with the regulator, transactions by the ETFs should happen by SFC-licensed crypto platforms or approved 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 features 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.