The Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) jointly issued a notice today, stating that after reviewing existing policy guidelines, the regulatory authorities have determined that these policies apply to intermediaries wishing to engage in activities related to virtual assets. Therefore, the Hong Kong regulatory authorities further stated that in addition to existing virtual asset futures ETFs, they are ready to accept applications for other funds involving virtual assets, including virtual asset spot ETFs.
In its notice, the SFC stated that the regulatory authorities will allow these virtual currency ETFs to be subscribed and redeemed in either physical form (such as the virtual assets themselves) or in cash. However, the SFC has also imposed several requirements. For example, funds intending to invest in spot virtual assets can only invest in currencies that are already publicly traded in Hong Kong and can be traded on virtual asset trading platforms (VATPs) approved by the SFC.
In addition, the custodian of the fund can only entrust the custody of its cryptocurrency to virtual asset trading platforms authorized by the SFC or institutions that comply with the cryptocurrency custody standards issued by the Hong Kong Monetary Authority. Furthermore, if the issuer of the fund intends for virtual asset investment units to account for more than 10% of the total net asset value of the fund, prior consultation with the SFC is required.
According to previous reports by Zombit, Ashley Alder, the CEO of the SFC, has previously stated in an interview that Hong Kong is considering whether to allow retail investors to invest in such spot ETFs, but it needs to address regulatory concerns.
