Hong Kong regulator gears up to accept crypto Spot ETF applications

While market participants await an approval on Spot Bitcoin ETF by the US Securities and Exchange Commission, Hong Kong regulators showed the green light to the investment product. 

The two authorities: the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) issued a joint circular to share their readiness for Spot crypto ETF applications. 

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Hong Kong regulators show the greenlight to applicants for spot crypto ETFs

Financial regulators said in a circular on December 22 that they are prepared to accept applications for the authorization of other funds with exposure to virtual assets, including virtual asset spot exchange-traded funds. 

The joint circular sheds light on the fact that both regulatory agencies in Hong Kong have reviewed their existing policies for cryptocurrency Spot ETFs and signaled their preparedness to review cryptocurrency Spot ETFs. 

The circular states that it supersedes previous ones and clearly specifies the requirements applicable to intermediaries when they distribute cryptocurrency-related products. The circular sets the standards of conduct that is expected of issuers that plan to engage in distribution of Spot Crypto ETFs authorized by regulatory authorities.  

While the US SEC has stressed upon in-cash redemption for Spot Bitcoin ETFs, the SFC noted that both in-kind and in-cash subscription and redemption are allowed. Trustees or custodians of the Exchange Traded Funds should delegate only their crypto custody function to a licensed Virtual Asset Trade Partner that meets crypto custody standards issued by the HKMA.