News from Hong Kong: Crypto spot ETF coming by mid-year

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The executive director of cryptocurrency exchange OSL, Gary Tiu, told local media that Hong Kong could introduce a crypto spot ETF by the middle of the year. 

Specifically, Tiu highlighted the possibility that the city will launch this financial product in the coming months. Let’s see all the details below. 

Crypto spot ETF in Hong Kong: is the financial revolution coming?

As anticipated, Gary Tiu, Executive Director and Head of Regulatory Affairs at OSL, indicated that the special administrative region could witness the debut of its first exchange-traded cryptocurrency spot funds by the middle of this year, as reported by local media.

According to the Hong Kong Economic Journal reported on Monday, Tiu explained that OSL is actively in contact with several asset management companies. 

Among these, about five/ten are currently considering the possibility of introducing an ETF of this type. 

This person emphasized that about five of these companies are advancing more rapidly than the others and could potentially launch the first Hong Kong crypto spot ETFs by mid-year.

The OSL executive has acknowledged the pressure to maintain reasonable fees in collaboration with fund companies, considering that currently only two cryptocurrency exchanges are authorized in the city, as reported by the media.

This has confirmed the details reported in the media report with The Block on Monday, defining the introduction of crypto spot ETFs as a fundamental development in the city’s crypto space. 

He also emphasized that these ETFs offer several key advantages

Among these, we see the promotion of orderly markets for underlying digital assets, the creation of a model for the protection of local investors, and the acceleration of integration between regulated digital asset platforms and traditional financial institutions.

The new directives for Hong Kong by SFC and HKMA

The above statements by the OSL executive follow the announcement of HashKey, another cryptocurrency exchange licensed in Hong Kong, which at the beginning of the month declared to be in negotiations with asset managers to explore potential crypto spot ETFs. 

Livio Weng, chief operating officer of HashKey, has indicated that around ten fund companies are considering the idea of launching such ETFs in the city.

In the past week, Venture Smart Financial Holdings Ltd, a financial services company based in Hong Kong, announced plans to potentially launch a spot bitcoin ETF within the first quarter. 

In other words, Hong Kong is about to pave the way for spot cryptocurrency ETFs. 

Not by chance, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), the de facto central bank of the city, announced in December a review of their existing policy. 

The regulatory authorities have issued two circulars detailing the requirements for crypto spot ETFs.

The December circular from the SFC specified that cryptocurrency transactions carried out through crypto spot ETFs must take place on SFC-licensed cryptographic platforms or authorized financial institutions.

Currently, Hong Kong has listed several crypto ETFs based on futures, including Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.

VSFG also ready to launch Bitcoin ETF

As mentioned, the financial sector of Hong Kong is going through a period of change, led by Venture Smart Financial Holdings Ltd. (VSFG), which aims to launch a spot Bitcoin exchange-traded fund (ETF) in the first quarter of 2024. 

This initiative is an integral part of Hong Kong’s broader ambition to establish itself as a hub for digital resources.

The goal of VSFG is not limited to simply introducing a new financial product, but also aims at a significant growth of managed assets. 

With the ambitious goal of reaching $500 million in assets under management by the end of 2024, Brian Chan, investment and product manager of the VSFG group, emphasizes the significant potential of the market and the company’s commitment to becoming a key player in the domain of cryptocurrencies.

This move by VSFG follows the introduction, by Hong Kong, of a specific regulatory framework for virtual assets in June 2023. 

This framework allows retail investors to trade significant tokens such as Bitcoin and Ether on authorized exchanges, seeking to balance the city’s innovation with investor protection.

The VSFG initiative reflects a broader trend in Hong Kong, where the financial sector is increasingly embracing cryptocurrencies.

 With the continuous development of the cryptocurrency market, it is expected that the introduction of more regulated products, such as spot Bitcoin ETFs, will attract a wider audience of investors, potentially leading to a more stable and mainstream adoption of digital currencies.