With ambitions of becoming a digital asset hub in the Asia-Pacific region, Hong Kong is currently considering the introduction of ETF Spot funds for retail cryptocurrency investors.
Recently, the Hong Kong Securities and Futures Commission (SFC) has greenlit retail investors to purchase directly-traded cryptocurrency Exchange-Traded Fund (ETF Spot) funds.
“We welcome proposals using innovative technology to enhance efficiency and client experience. We are open to experimenting as long as risks are addressed. Our approach is consistent regardless of the asset class.”
– Julia Leung, CEO of the SFC
This move represents a significant step forward in the cryptocurrency space. However, the adoption of cryptocurrency ETF funds remains modest, even though both the US and Hong Kong have approved cryptocurrency ETF Future funds.
In Hong Kong, there are currently three ETF Future funds trading: Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures, with a combined asset value of around $65 million.
Notably, the recent attitude of financial authorities in Hong Kong towards cryptocurrencies has been increasingly friendly. Their views on retail investors getting involved with digital assets have notably evolved over the past year.
In January 2023, the SFC tightened regulations by restricting retail investors’ access to cryptocurrency ETF Spot funds, allowing only professional investors with a minimum investment portfolio of HKD 8 million (USD 1 million) to participate. Then, in October, the SFC updated the regulatory framework, allowing more investors to engage in cryptocurrency trading and ETF Spot funds.
“The policy update is made in response to new industry requirements to expand retail investors’ access through intermediaries and allow investors to deposit and withdraw cryptocurrencies directly from/in intermediaries with adequate safeguards.”
– SFC statement
Moreover, last month, Hong Kong also unveiled its Web3 plans. Furthermore, the Hong Kong Monetary Authority is making efforts to integrate digital asset custody services into banks – a crucial element in nurturing the growth of the digital asset ecosystem.