Hong Kong Urged to Expedite Spot Crypto ETF Approvals Following US Lead

January 16, 2024

By Sharan Kaur Phillora

Following the United States’ recent authorization of spot cryptocurrency exchange-traded funds (ETFs), industry experts urge Hong Kong to accelerate its approval process for similar products. This move is crucial for Hong Kong’s aspiration to become Asia’s leading virtual asset hub.

Here’s what we know:

Despite the Securities and Futures Commission (SFC) of Hong Kong indicating readiness in December to authorize retail access to spot virtual asset ETFs, the city is yet trailing the US in launching these products, as observed by Wang Yi, head of quantitative investment at CSOP Asset Management.

US-listed spot bitcoin ETFs, including those from BlackRock, Grayscale, and ARK 21Shares, traded US$4.6 billion of shares on their first day, signifying strong investor interest. This success in the US is expected to influence Hong Kong regulators to authorize similar funds in the city. Spot cryptocurrency ETFs offer investors exposure to virtual assets without requiring direct crypto token purchases.

RJ Ke, a researcher with Ethereum scaling start-up Taiko, emphasized the importance of these funds, stating, “Spot cryptocurrency ETFs lend more legitimacy to the crypto industry and open up collaboration opportunities with mainstream finance.” He anticipated Hong Kong’s response and suggested that the city will likely expedite bitcoin ETF applications in the coming months.

Mao Shixing, co-founder and CEO of digital asset custody solutions provider Cobo, stressed the urgency for Hong Kong to launch these ETFs. He highlighted the global influence of the SEC’s decisions, suggesting that they often serve as a benchmark for financial regulators worldwide. However, he acknowledged that each region has its distinct regulatory objectives.

Globally, with the U.S. inclusion, nine markets have authorized the operation of spot crypto ETFs. However, mainland China seems unlikely to follow this trend. Despite supporting Hong Kong’s virtual-asset hub ambitions, China maintains a stringent stance against cryptocurrencies, as evidenced by its past prohibitions and recent state media warnings about the risks associated with spot cryptocurrency ETFs.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.

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