Hong Kong Ready to Accept Proposals for Crypto Spot ETFs

4:59 pm
December 22, 2023
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**Hong Kong Welcomes Applications for Crypto Spot ETFs**

Hong Kong has made an announcement welcoming applications from traditional financial companies interested in venturing into the budding economy by creating exchange-traded funds (ETFs) linked to spot-based cryptocurrencies. This development comes as the country is already open to futures-based crypto ETFs and has approved the listing of ETFs such as the Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures.

In a joint circular by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), the regulators stated that Hong Kong has revised its regulations to allow for various investment options involving digital assets, including those aimed at retail investors. The authorities shared that they have received an increased number of requests from intermediaries regarding the potential distribution of investment products with exposure to virtual assets.

**Hong Kong’s Criteria for Crypto Spot ETFs**

In a separate circular, the SFC outlined the criteria for approving crypto spot ETFs, emphasizing the need for compliance with relevant regulations and a strong track record of regulatory adherence for the management companies. Additionally, the circular specified that crypto transactions conducted by these ETFs must take place on SFC-licensed crypto platforms or authorized financial institutions.

Furthermore, the SFC stressed the importance of custody arrangements, highlighting that the fund’s trustee or custodian can delegate its crypto custody function solely to an SFC-licensed VATP or entities meeting the crypto custody standards set forth by the HKMA.

**FAQs**

Q: What types of crypto ETFs has Hong Kong already approved?
A: Hong Kong has already approved futures-based crypto ETFs and has listed ETFs such as the Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures.

Q: What types of cryptocurrencies can be included in the newly allowed spot-based ETFs in Hong Kong?
A: The newly allowed spot-based ETFs in Hong Kong can include cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and other digital assets.

Q: What are the criteria for approving crypto spot ETFs in Hong Kong?
A: The criteria for approving crypto spot ETFs in Hong Kong include compliance with relevant regulations, a strong track record of regulatory adherence for the management companies, and conducting crypto transactions on SFC-licensed platforms or authorized financial institutions.


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