Today, HashKey’s Chief Operating Officer, Livio Weng, revealed that approximately ten fund companies have plans to launch virtual asset spot ETFs in Hong Kong, which has motivated the three virtual currency ETFs currently listed in Hong Kong to perform well yesterday.
Background:
Not only spot ETFs! Hong Kong’s Securities and Futures Commission regulates virtual asset custody, requiring the storage of private keys in Hong Kong and the separation of customer platform assets.
Table of Contents:
Multiple fund companies to launch virtual asset spot ETFs in Hong Kong
Three virtual currency futures ETFs surge
Regulatory points for Hong Kong virtual asset spot ETFs
In late December of last year, Hong Kong made a statement that they are ready to accept authorization applications for “virtual asset spot ETFs and related funds,” seemingly indicating their intention to make Hong Kong the first region in Asia to list spot ETFs.
Today, in an interview with HashKey Group’s Chief Operating Officer, Livio Weng, he revealed that approximately ten fund companies are currently preparing to launch virtual asset spot ETFs in Hong Kong, with seven to eight of them already in the actual implementation stage. This means that Hong Kong is gradually becoming the first market in Asia to allow the listing of virtual asset spot ETFs.
As one of the only two licensed virtual asset exchanges in Hong Kong, HashKey Exchange stated that their participation in virtual asset spot ETFs mainly focuses on “virtual asset trading involved in the funds” and “virtual asset custody,” which are the two core business areas.
Possibly influenced by this news, the three virtual currency ETFs currently listed in Hong Kong performed well yesterday. The BTC futures ETF (3066.HK) saw a 7.07% increase, the XBT futures ETF (3135.HK) had a 7.02% increase, and the ETH futures ETF (3068.HK) also rose by 4.15%.
These three products ranked in the top three of the ETF performance list on the Hong Kong Stock Exchange, surpassing other asset categories.
On December 22nd of last year, the Securities and Futures Commission of Hong Kong issued the “Joint Circular on Intermediaries’ Activities in Virtual Asset-related Business” and the “Circular on the Authorization of Funds Investing in Virtual Assets.” They listed several requirements for the regulation of virtual asset spot funds, including:
Issuer qualifications: Institutions issuing BTC spot ETFs need to have a good compliance record, employees with experience in managing cryptocurrency products, and a Type 9 license.
Permissible virtual asset categories: According to existing rules in Hong Kong, BTC and ETH are the main cryptocurrencies allowed to be included in ETFs.
Anti-money laundering requirements: Hong Kong allows the issuance of virtual asset spot ETFs in either physical or cash redemption mode. Under the physical redemption mode, cryptocurrency must be transferred to a licensed exchange in Hong Kong or other regulated financial institutions to comply with anti-money laundering regulations.
Cryptocurrency custody requirements: Cryptocurrencies need to be held by independent third-party custodians, and the custodian must be a licensed exchange in Hong Kong or other compliant institutions. Most virtual assets should be stored in cold wallets, and the amount and duration of virtual assets held in hot wallets should only be used for necessary subscription and redemption operations. Additionally, the private keys of the wallets must be stored in Hong Kong, taking measures to prevent cyber attacks and ensuring proper backup.
Investor restrictions: Currently, residents of mainland China are not allowed to purchase virtual asset ETFs issued in Hong Kong because these products do not comply with the regulations stated in the “Notice on Further Preventing and Dealing with Speculative Trading Risks in Virtual Asset Transactions” in mainland China.
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