Exploring the Launch of Spot Crypto ETFs
In an exciting development for the crypto industry, Hong Kong is on the brink of witnessing the introduction of its first spot crypto exchange-traded funds (ETFs) by the middle of this year. According to Gary Tiu, the executive director and head of regulatory affairs at OSL, a Hong Kong-licensed cryptocurrency exchange, OSL is in discussions with numerous fund companies. Tiu revealed that five to ten firms are contemplating the introduction of a spot crypto ETF, with some making faster progress than others. This progress raises the possibility of Hong Kong unveiling its inaugural spot crypto ETFs by mid-2024, as reported by the Hong Kong Economic Journal.
Tiu emphasized the importance of maintaining reasonable fees associated with the collaboration between OSL and the fund companies, particularly due to the limited number of licensed crypto exchanges currently operating in the city.
“The introduction of spot crypto ETFs will mark a significant milestone for the crypto industry in Hong Kong,” said Tiu.
Tiu highlighted the numerous advantages that these ETFs bring, such as promoting orderly markets for underlying digital assets, instituting investor protection measures, and fostering integration between regulated digital asset platforms and traditional financial institutions.
Livio Weng, the chief operating officer of HashKey, another licensed crypto exchange in Hong Kong, revealed that approximately ten fund companies have also started exploring the potential launch of spot crypto ETFs in the city.
Venture Smart Financial Holdings Ltd, a Hong Kong-based financial services firm, recently announced plans to potentially introduce a spot bitcoin ETF within the first quarter of this year, with the goal of growing the ETF’s assets under management to $500 million by the end of 2024.
Regulatory Preparations and Future Outlook
Hong Kong is actively gearing up to pave the way for spot crypto ETFs, with the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) announcing a review of their existing policies in December. The authorities issued circulars outlining the requirements for spot crypto ETFs, stressing that transactions should be carried out via SFC-licensed crypto platforms or authorized financial institutions.
The city state currently hosts several futures-based crypto ETFs but is now set to embrace spot crypto ETFs to further enhance its position in the cryptocurrency market.
Looking ahead, local lawmaker Johnny Ng announced that Hong Kong will host The Bitcoin Conference this year and urged the government to follow the United States’ footsteps in approving spot Bitcoin ETFs to solidify the city’s stance as a leader in the crypto space.
