JAN 13, 2024
Hong Kong lawmaker suggests action on ETFs as asset managers explore potential
In the immediate aftermath of the approval of spot bitcoin exchange-traded funds (ETFs) in the United States earlier this week, a Hong Kong legislator has spoken out to encourage a proactive response within the Chinese autonomous territory, while asset managers appear to be responding accordingly.
Lawmaker Johnny Ng has called on the local government to swiftly embrace the recent ETF approval in the United States. In a post on X, Ng emphasized the need for Hong Kong to proactively lead the way in the cryptocurrency space, fostering innovation to secure a global position amidst intense competition.
Ng highlighted the Securities and Futures Commission’s (SFC) previous expression of readiness to accept applications for spot bitcoin ETFs. He urged Hong Kong to capitalize on the rapidly evolving virtual asset sector, implementing policies and products that position the city as a global hub for virtual assets.
“This presents an opportunity to solidify Hong Kong’s position as a global hub for virtual assets,” Ng stated, emphasizing the importance of seizing this moment in the market’s development.
In December, Hong Kong’s regulatory bodies, the SFC and the Hong Kong Monetary Authority (HKMA), reviewed their existing policies, releasing circulars that outlined the requirements for spot crypto ETFs.
Fund managers explore ETFs
HashKey, a licensed crypto exchange in Hong Kong, confirmed its potential participation in spot crypto ETFs through engaging in crypto transactions associated with ETFs and providing crypto custody services. The company, which obtained a license from the SFC to offer retail crypto trading services in August, positions itself to play a pivotal role in the emerging market.
Livio Weng, COO of the Hong Kong-based crypto exchange, revealed that approximately ten fund managers, backed by Chinese capital and others from Asia and Europe, are exploring the launch of spot crypto ETFs in Hong Kong.
Weng, in an interview with Chinese financial news media Caixin, disclosed that seven or eight of these fund managers have already been in contact with the SFC, forming teams to design investment products.
Highlighting the importance of education in the crypto space, Ng called on the Hong Kong government to prioritize public education. He stressed the need to increase awareness of virtual assets among the public while simultaneously reducing opportunities for illicit activities involving digital assets.
In an interview earlier this week, Yat Siu, the co-founder of Hong Kong-based crypto venture capital and game software firm Animoca Brands, expressed the view that the spot bitcoin ETF approval in the U.S. would have a more substantial impact on the overall development of crypto in Asia.
As Hong Kong prepares to pave the way for spot crypto ETFs, the SFC and the HKMA have already reviewed existing policies, outlining the requirements for such investment products. The December circular from the SFC emphasized that transactions involving spot crypto ETFs should occur through licensed crypto platforms or authorized financial institutions, ensuring regulatory compliance in the growing crypto market.