As Hong Kong gets closer to approving spot cryptocurrency ETFs, nearly a dozen hedge funds are lining up to apply for the new financial product.
In an interview with Chinese news outlet Caixin, Livio Weng, Chief Operating Officer of HashKey Group, revealed that nearly a dozen hedge funds are preparing to submit applications to launch spot crypto trading funds (ETFs) in Hong Kong, as the city prepares to become the first market in Asia allows the listing of these financial products.
While the timeline for Hong Kong regulators to approve the applications remains uncertain, Weng said that as many as eight of the hedge funds are already in the “actual progress stage,” although specific details were not provided.
This development follows a joint circular issued by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) in December 2023, in which the regulators acknowledged the growing interest in launching spot cryptocurrency ETFs. The SEC confirmed its readiness to accept applications to license funds with exposure to cryptocurrencies, including spot cryptocurrency ETFs.
It is worth noting that Hong Kong has already granted permission to crypto futures ETFs in the region, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF. These ETFs are available to Hong Kong investors with portfolios exceeding $2 million through the local branch of UBS.
While Hong Kong's financial regulators express a willingness to consider approving spot cryptocurrency ETFs, their overall stance on the broader cryptocurrency market appears to be cautious. In late December 2023, the Financial Services Bureau and Treasury (FSTB) and the Hong Kong Monetary Authority (HKMA) issued a joint statement explaining their decision to allow retail investors to purchase stablecoins.
Despite the move, regulators emphasized that stablecoin issuers will have to obtain a special license from the Securities and Exchange Commission before offering their services in the region. Licensing requirements include comprehensive measures such as full support for all stablecoins in circulation with reserves matching the nominal value, proper segregation and custody of reserve assets, transparent disclosure practices, and regular reporting.
Furthermore, stablecoin issuers seeking approval will need to establish a physical presence in Hong Kong by opening an office. This office should include a CEO, senior management team and key personnel to ensure compliance with regulatory standards and effective oversight.
