Hong Kong regulator announces plan to launch mainstream crypto ETF

As cryptocurrencies move into the mainstream, different jurisdictions are working towards launching related products amid increased demand from investors. 

In this line, Hong Kong is the latest region to announce plans to launch a cryptocurrency exchange-traded fund (ETF) targeting mainstream cryptocurrencies like Bitcoin (BTC), local outlet Ming Pao reported on October 31. 

According to the Hong Kong Securities and Futures Commission (SFC) CEO Leung Fung Yee, the agency has actively been working on establishing a mechanism to authorize the ETF.

The official pointed out that the mechanism mainly focuses on rolling out the appropriate laws to govern the ETF. Yee stated although the crypto sector comes with challenges like high volatility, the decision to explore an ETF comes after the initial concerns about the space became manageable. 

Subject to additional laws

Furthermore, Yee stated the ETF products would be subjected to additional requirements around disclosure of investment strategies by their management companies and investor education.

In a statement, the SFC stated it would be conducting a public consultation session detailing how retail investors can be given access to cryptocurrencies. 

“The Securities and Futures Commission will be conducting a public consultation on how retail investors may be given a suitable degree of access to VA (virtual assets), and Hong Kong will be open to the possibility of having Exchange Traded Funds (ETFs) on VA in our market,” SFC said. 

Developing crypto sector 

Overall, the regulator stated Hong Kong is open to developing the fintech industry with a focus on non-fungible tokens (NFT), metaverse, and Web 3.0. Already the government is working on pilot projects to explore the benefits of cryptocurrencies in the financial markets. 

“We recognize the potential of DLT and Web 3.0 to become the future of finance and commerce, and under proper regulation, they are expected to enhance efficiency and transparency. The government is prepared to embrace this future, and we welcome the clustering of Fintech and VA community and talents in Hong Kong, and we will promote the sustainable development of financial services across the whole VA value chain,” said Secretary for Financial Services and the Treasury, Christopher Hui. 

Notably, Hong Kong’s decision to relax rules around the launch of ETFs aligns with the region’s intention to transform into an Asian finance and cryptocurrency hub.