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Report – Regulations Bitcoin News

The Hong Kong Securities and Futures Commission (SFC) is “actively seeking” to create a regulatory framework that would allow crypto futures exchange-traded funds (ETFs), an SFC official has reportedly said. “We have come to believe that some initial concerns about virtual asset futures ETFs have become manageable and can be addressed with appropriate safeguards.”

Growing demand for crypto ETFs in Hong Kong

Hong Kong’s top financial regulator is “actively seeking” to establish a regulatory framework that would allow retail investors to trade exchange-traded funds (ETFs) with exposure to cryptocurrency futures, Ignites Asia reported Monday. The publication quoted Julia Leung, Deputy CEO and Executive Director of the Securities and Futures Commission (SFC) Division of Brokers.

Leung reportedly said last week during his keynote address at Hong Kong Fintech Week that the SFC is “actively seeking to establish a regime to license ETFs that provide conventional virtual assets with adequate investor protection measures.”

He explained that initially, the Securities and Futures Commission will only allow ETFs that invest in bitcoin futures and ether futures traded on the Chicago Mercantile Exchange (CME).

The SFC published a circular on October 31 outlining the requirements under which it “would consider authorizing exchange-traded funds (ETFs) that gain exposure to virtual assets (VAs) primarily through futures contracts (VA Futures ETFs) for public offering. in HK. ”, detailed the regulator, elaborating:

A wide range and increased number of investment products that provide VA exposure, including VA-related ETFs offered in various markets globally, are now available to retail and professional investors and have become increasingly popular. Similarly, the demand for such products has increased in Hong Kong.

The circular further states that the SFC “is prepared to accept requests for authorization of ETFs from VA Futures.”

In November 2018, a regulatory framework for crypto assets was issued for the first time, restricting access to professional investors. Defending the decision not to allow retail investors to trade cryptocurrencies, Leung said: “Given the novelty of our framework and the high volatility of crypto assets, we believe it was prudent to impose a blanket ‘professional investor’ restriction.”

However, the chief executive stressed that Hong Kong’s crypto ecosystem had made “substantial progress” in the past four years. During this time, the SFC had gained more experience in regulating crypto trading platforms and fund companies, he detailed, elaborating:

We have come to believe that some initial concerns about virtual asset futures ETFs have become manageable and can be addressed with the proper safeguards.

“Now is an opportune time to review the ‘professional investors only’ requirement,” he added, stressing that the SFC is preparing to adjust its “regulatory response and allow retail access” to security token offerings with certain safeguards.

What do you think of Hong Kong seeking to establish a regulatory framework to allow crypto futures ETFs for retail investors? Let us know in the comments section.

kevin helms

Kevin, an Austrian economics student, found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in the security of Bitcoin, open source systems, network effects, and the intersection between economics and cryptography.

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