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Hong Kong Opens Doors For Spot Crypto ETFs Applications Amid US SEC Anticipated Approval

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Hong Kong has announced its readiness to accept applications for spot crypto exchange-traded funds (ETFs). The Securities and Futures Commission (SFC), Hong Kong’s financial watchdog, alongside the Hong Kong Monetary Authority, the city’s central banking institution, jointly published circulars today, laying the groundwork for this significant shift in the crypto landscape.

The move marks a decisive step in Hong Kong’s efforts to position itself as a leading hub for digital asset innovation and regulation. The SFC’s readiness to consider applications for spot crypto ETFs signals a progressive approach to embracing the growing interest in digital assets.

The regulator has specified that these ETFs should primarily focus on investments directly in spot virtual asset tokens available to the Hong Kong public on SFC-licensed virtual asset trading platforms (VATPs).

Hong Kong Sets High Standards For Crypto ETFs

The SFC has outlined detailed requirements for the management of these financial products. To ensure robust regulatory compliance, transactions executed by the ETFs must occur through SFC-licensed crypto platforms or authorized financial institutions.

This measure aims to bring a higher level of security and legitimacy to the crypto trading ecosystem in Hong Kong. Additionally, in a move that adds flexibility to the operation of these ETFs, the SFC has stated that both in-kind and in-cash subscription and redemption methods will be permitted for SFC-authorised spot virtual asset ETFs.

The implication is that these ETFs will have greater operational versatility, catering to a broader investor base and providing more options in terms of investment strategies.

The SFC stipulates that for digital asset custody, the fund’s trustee or custodian must exclusively assign the responsibility of crypto custody to an SFC-licensed Virtual Asset Trading Platform (VATP) or to organizations that comply with the crypto custody guidelines establish

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Author: Samuel Edyme

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