The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) stated in their joint announcement released today that, after reviewing existing policy regulations, regulatory authorities have determined that these policies apply to intermediaries who wish to participate in activities related to virtual assets. Therefore, the Hong Kong regulatory authorities further stated that, in addition to existing virtual asset futures ETFs, they are ready to accept other fund applications involving virtual assets, including virtual asset spot ETFs.
The SFC stated in its announcement that it will allow these virtual currency ETFs to be subscribed and redeemed in either physical form (such as the virtual assets themselves) or cash. However, the SFC has also imposed several requirements. For example, funds intending to invest in spot virtual assets can only invest in currencies that have been publicly traded in Hong Kong and can be traded on virtual asset trading platforms (VATPs) authorized by the SFC.
In addition, the trustee or custodian of the fund can only entrust the custody of its cryptocurrencies to virtual asset trading platforms authorized by the SFC or institutions that comply with the cryptocurrency custody standards issued by the Hong Kong Monetary Authority. Furthermore, if the fund issuer intends for the virtual asset investment quota to account for more than 10% of the total net asset value of the fund, prior consultation with the SFC is required.
According to a previous report by Zombit, Ashley Alder, the CEO of the SFC, stated in an interview that Hong Kong is considering whether to allow retail investors to invest in such spot ETFs, but it needs to address regulatory concerns.
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