Hong Kong stuck to a “professionals only” approach to regulating advanced crypto products like ETFs, but it now says it’s open to retail products in what could be a game changer.
The city-state is a global financial hub, and once a Bitcoin, Ether, or XRP spot ETF is listed in the city, it could open the floodgates for institutional investment into crypto.

Crypto spot ETFs are all the rage right now, and the entire industry awaits with bated breath the SEC’s decision in January over Bitcoin and Ether applications. However, as the US grabs all the attention on its ETF journey, it might be an Asian financial hub that kickstarts a global crypto spot ETF revolution.

Hong Kong has revealed that it’s now changing its stance on crypto products and will allow retail investors to get involved in more sophisticated crypto products.

The city-state was once strict with crypto and only allowed professional investors to be involved in ETFs, derivatives, and other complex products. In Hong Kong, a professional investor must have a portfolio worth at least HKD 8 million ($1.02 million). This left out the majority of the population. However, this is bound to change soon.

In a recent statement, the Securities and Futures Commission and the Hong Kong Monetary Authority (HKMA) revealed their stance as the market has developed.

“A broader range and a larger number of investment products are now available and provide both retail and professional investors with exposure to virtual assets,” the two watchdogs acknowledged.

It added:

In particular, the SFC has allowed SFC-licensed virtual asset trading platforms (VA trading platforms) to serve retail investors and has authorised virtual asset futures exchange-traded funds (VA futures ETFs) for public offering in Hong Kong.

Hong Kong to Allow Crypto ETFs

ETFs in the crypto world have existed for years. However, in most jurisdictions, they are tied to derivative products and not the actual tokens. Essentially, they don’t affect the crypto price directly, even if they attract billions of dollars in investment.

Spot ETFs are game-changers as they invest directly in the underlying tokens and would likely scoop up billions of dollars worth of crypto, decreasing supply and boosting the price. According to one crypto analytics company, these ETFs could propel the market by at least $1 trillion.

Hong Kong wants to be at the fore of this revolution and will now accept applications for crypto spot ETFs. In the statement, the two watchdogs said:

The policy is updated in light of the latest market developments, where the SFC has authorised VA futures ETFs and is prepared to accept applications for the authorisation of other funds with exposure to virtual assets, including virtual asset spot exchange-traded funds (VA spot ETFs).

Hong Kong has been pushing to be a crypto hub in the past two years, a stark contrast to the anti-Btcoin stance of mainland China. Despite the JPEX exchange scam imploding in the city and costing investors HKD1.56 billion, the city remains committed to its vision.

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Filed under: Bitcoin - @ December 26, 2023 9:06 pm