While the crypto community awaits the U.S. Securities and Exchange Commission’s (SEC) approval for a spot Bitcoin exchange-traded fund (ETF), Hong Kong’s Securities and Futures Commission (SFC) has announced readiness to accept applications for ETFs, including those for spot cryptocurrencies. This move signifies a major step towards integrating digital assets into mainstream finance in Hong Kong.
Blockchain journalist Colin Wu, through his social media platform, reported on the SFC’s new stance, highlighting the agency’s willingness to authorize ETFs that involve various digital assets. This development is seen as a response to the growing demand for investment products that allow exposure to digital assets.
The SFC’s announcement reflects a shift in regulatory approach since 2018, when guidelines were initially set to restrict certain digital asset activities to professional investors only. The rapid expansion of the digital asset market into mainstream finance has prompted a review of existing policies by both the SFC and the Hong Kong Monetary Authority (HKMA).
In line with these changes, the SFC is now open to applications for the authorization of funds that invest in digital assets, including both futures and spot digital asset ETFs. This opens the door for intermediaries to propose a variety of ETFs, such as spot Bitcoin and Ethereum ETFs, to the Hong Kong market.
Exchange-traded funds (ETFs) are investment vehicles that allow a group of investors to pool their funds and invest in a diversified portfolio of financial assets, like stocks, bonds, and liquid funds. Managed by a portfolio manager, ETFs offer investors a cost-effective way to diversify their investments. They are divided into tradable units on stock exchanges, providing high liquidity and allowing investors to buy and sell at any time.
Spot ETFs focus on investments in the spot markets, typically tracking specific indexes or sectors, while futures ETFs involve financial instruments from the futures market, potentially carrying higher risks due to derivatives and market volatility. These funds offer diversification by investing in both spot and futures markets.