Hong Kong has introduced its readiness to simply accept functions for spot crypto exchange-traded funds (ETFs). The Securities and Futures Fee (SFC), Hong Kong’s monetary watchdog, alongside the Hong Kong Financial Authority, town’s central banking establishment, collectively revealed circulars right this moment, laying the groundwork for this vital shift within the crypto panorama.
The transfer marks a decisive step in Hong Kong’s efforts to place itself as a number one hub for digital asset innovation and regulation. The SFC’s readiness to contemplate functions for spot crypto ETFs alerts a progressive method to embracing the rising curiosity in digital belongings.
The regulator has specified that these ETFs ought to primarily concentrate on investments straight in spot digital asset tokens out there to the Hong Kong public on SFC-licensed digital asset buying and selling platforms (VATPs).
Hong Kong Units Excessive Requirements For Crypto ETFs
The SFC has outlined detailed necessities for the administration of those monetary merchandise. To make sure strong regulatory compliance, transactions executed by the ETFs should happen by means of SFC-licensed crypto platforms or licensed monetary establishments.
This measure goals to deliver the next stage of safety and legitimacy to the crypto buying and selling ecosystem in Hong Kong. Moreover, in a transfer that provides flexibility to the operation of those ETFs, the SFC has acknowledged that each in-kind and in-cash subscription and redemption strategies might be permitted for SFC-authorised spot digital asset ETFs.
The implication is that these ETFs may have higher operational versatility, catering to a broader investor base and offering extra choices by way of funding methods.
The SFC stipulates that for digital asset custody, the fund’s trustee or custodian should solely assign the accountability of crypto custody to an SFC-licensed Digital Asset Buying and selling Platform (VATP) or to organizations that adjust to the crypto custody tips established by the Hong Kong Financial Authority (HKMA).
This requirement underscores the regulator’s dedication to safeguarding investor belongings towards the distinctive dangers related to digital asset custody.
When valuing spot digital belongings, the SFC advises fund administration corporations to make the most of an “indexing method” that displays “digital asset commerce quantity throughout main buying and selling platforms.” This technique goals to offer a extra correct and truthful market worth for the belongings held by the ETFs.
US SEC’s Anticipated Approval Of Spot Bitcoin ETFs
The worldwide crypto market can be intently monitoring developments in america, the place the SEC is anticipated to make a pivotal resolution on spot Bitcoin ETFs. Bloomberg analyst James Seyffart has expressed optimism that the SEC will greenlight a spot Bitcoin ETF as early as January 2024.
Latest amendments to identify ETF proposals within the US, together with BlackRock’s newest replace to simply accept money redemptions, point out the trade’s willingness to adapt to regulatory necessities. Seyffart revealed that this readiness to embrace a cash-only mannequin is likely to be crucial for securing US Securities and Alternate Fee (SEC) approval.
Shall be fascinating to see who updates their paperwork after this. SEC won’t be comfy with a Prime Execution Agent (a third get together shopping for and promoting bitcoin on behalf of the ETF) buying the #Bitcoin within the money mannequin . That is how BlackRock’s is deliberate at second: https://t.co/pGWUNp7Lw3 pic.twitter.com/2D60KX7OUI
— James Seyffart (@JSeyff) December 21, 2023
Seyffart anticipates that some issuers who fail to undertake this mannequin is likely to be “left behind” within the quickly evolving ETF panorama.
Notably, the potential approval of those spot ETFs, each in Hong Kong and the US, may sign a brand new period within the digital asset market, providing buyers regulated automobiles to achieve publicity to cryptocurrencies. This improvement can be a testomony to the rising acceptance of digital belongings in mainstream finance
Featured picture from Unsplash, Chart from TradingView
