Hong Kong Financial Regulator Prepared to Accept Applications for Spot Crypto ETFs
Hong Kong’s Securities and Futures Commission (SFC) has expressed its readiness to consider applications for spot crypto exchange-traded funds (ETFs).
The SFC and the Hong Kong Monetary Authority (HKMA) have issued a joint circular addressing the increasing interest in launching spot crypto ETFs. While the SFC had previously allowed licensed crypto providers to offer cryptocurrency futures ETFs in Hong Kong, spot ETFs had not been granted similar permission.
However, the SFC has now stated that it is “prepared to accept applications for the authorization of other funds with exposure to cryptocurrencies,” including spot crypto ETFs.
With the collaboration of the two regulators, the SFC stated that it had reviewed its policy for intermediaries involved in virtual asset-related activities. The SFC is now ready to receive applications for the authorization of various funds, including Virtual Asset Spot exchange-traded funds (VA spot ETFs), alongside existing crypto futures ETFs.
The regulatory approach in Hong Kong has evolved, departing from the “professional-investors-only” framework established in 2018. The SFC updated its rules in October to broaden investor participation in spot crypto and ETF investing.
In a circular issued on December 22, the SFC outlined criteria for funds to “directly invest in identical spot Virtual Asset (VA) tokens available to the Hong Kong public on SFC-licensed Virtual Asset Trading Platforms (VATPs).” The SFC emphasized that cryptocurrency transactions conducted by these ETFs must occur through SFC-licensed crypto platforms or authorized financial institutions.
The updated guidelines by the SFC allow for both in-kind and in-cash subscription and redemption processes. Management companies are
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