Hong Kong may soon see the launch of its first spot cryptocurrency exchange-traded funds (ETFs) by the middle of this year.
Gary Tiu, the executive director and head of regulatory affairs at OSL, a licensed cryptocurrency exchange in Hong Kong, has stated that OSL is actively engaged in discussions with several fund companies. He mentioned that approximately five to ten firms are contemplating the introduction of spot cryptocurrency ETFs.
Tiu also revealed that some of these firms have made faster progress than others, which raises the possibility of Hong Kong’s inaugural spot cryptocurrency ETFs becoming available by mid-2024. This development was also reported by the Hong Kong Economic Journal.
Furthermore, Tiu emphasized the importance of ensuring that the fees associated with the collaboration between OSL and the fund companies remain reasonable, particularly considering that there are currently only two licensed cryptocurrency exchanges operating in the city.
Spot Crypto ETFs to Boost Hong Kong’s Crypto Industry
Tiu emphasized that the introduction of spot cryptocurrency ETFs would represent a significant milestone for the cryptocurrency industry in Hong Kong. He pointed out several advantages that these ETFs could bring, including promoting orderly markets for the underlying digital assets, establishing protective measures for investors, and fostering greater integration between regulated digital asset platforms and traditional financial institutions.
Tiu’s remarks come on the heels of an earlier announcement by HashKey, another licensed cryptocurrency exchange in Hong Kong, indicating that it was in talks with asset managers to explore the potential launch of spot cryptocurrency ETFs.
Livio Weng, the Chief Operating Officer of HashKey, revealed that approximately ten fund companies have been exploring the possibility of introducing such ETFs in the city.
In a separate development, Venture Smart Financial Holdings Ltd, a financial services firm based in Hong Kong, recently announced its plans to potentially launch a spot bitcoin ETF in the first quarter of this year. The company aims to grow the ETF’s assets under management to $500 million by the end of 2024, as reported by Bloomberg.
Regulatory Reviews and Existing Policies
Hong Kong is actively preparing to facilitate the introduction of spot cryptocurrency exchange-traded funds (ETFs), with the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), the de facto central bank of the city, announcing in December that they have conducted a review of their existing policies.
In December, the regulators issued two circulars outlining the requirements for spot cryptocurrency ETFs. The SFC stressed that transactions carried out by spot cryptocurrency ETFs should take place through SFC-licensed cryptocurrency platforms or authorized financial institutions.
Currently, Hong Kong has listed several futures-based cryptocurrency ETFs, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.
In a separate development, it was announced that Hong Kong will be hosting The Bitcoin Conference this year, as revealed by local lawmaker Johnny Ng in a recent post. Following the approval of spot Bitcoin ETFs in the United States, Ng also urged the local government to promptly follow suit and position the city as a leader in the cryptocurrency sector.
