Concerning custody preparations, the SFC emphasizes that the fund’s trustee or custodian can delegate its crypto custody perform solely to an SFC-licensed VATP or entities assembly the crypto custody requirements set forth by the HKMA.
Hong Kong has introduced its readiness to obtain functions from conventional monetary corporations all for exploring the rising financial system by creating exchange-traded funds (ETFs) monitoring spot-based cryptocurrencies.
The nation already permits futures-based crypto ETFs and has permitted itemizing ETFs such because the Samsung Bitcoin Futures Energetic, CSOP Bitcoin Futures, and CSOP Ether Futures.
The crypto-friendly nation is now ready to open its borders to welcome spot ETFs for retail traders.
Hong Kong Prepared for Crypto Spot ETFs
The nation’s monetary regulators, the Securities and Futures Fee (SFC) and the Hong Kong Financial Authority (HKMA) shared the information in a joint round printed on Friday.
In keeping with monetary watchdogs, the Asian nation has efficiently reviewed its “skilled traders solely” regulation, established in 2018 to accommodate numerous funding choices for retail traders, together with digital belongings.
“The coverage has been up to date in gentle of the newest market developments, the place the SFC has licensed VA futures ETFs and is ready to just accept functions for the authorization of different funds with publicity to digital belongings, together with digital asset spot exchange-traded funds (VA spot ETFs),” reads the joint assertion.
The regulators stated they acquired elevated requests from intermediaries relating to the potential distribution of funding merchandise with publicity to digital belongings.
Nevertheless, with the current replace, these corporations can now submit functions for providing spot Bitcoin (BTC), Ethereum (ETH), or different digital asset funds for retail traders.
Hong Kong Imposes Strict Tips for Crypto Spot ETFs
In a separate circular, the SFC has outlined the standards for approving crypto spot ETFs, detailing the necessities that monetary regulators would contemplate.
In keeping with the assertion, corporations should make sure that the funds adjust to the related laws within the Overarching Ideas Part and the Code to supply such funding merchandise to clients. These laws are stipulated within the Unit Trusts and Mutual Funds (UT Code) throughout the SFC Handbook, encompassing Unit Trusts, Mutual Funds, Funding-Linked Assurance Schemes, and Unlisted Structured Funding Merchandise.
Moreover, SFC-authorized VA Funds administration corporations should reveal a robust observe report of regulatory compliance earlier than providing crypto spot ETFs.
They have to even have not less than one competent workers member with related expertise managing digital belongings or associated merchandise. These corporations will probably be topic to extra phrases and situations imposed by the Licensing Division when relevant.
The round specified that crypto transactions carried out by these ETFs should happen on SFC-licensed crypto platforms or licensed monetary establishments.
Concerning custody preparations, the SFC emphasizes that the fund’s trustee or custodian can delegate its crypto custody perform solely to an SFC-licensed VATP or entities assembly the crypto custody requirements set forth by the HKMA.