Hong Kong regulator re-examines cryptocurrency ETF law for retail clients

Hong Kong’s Securities and Futures Commission (SFC) is reviewing regulations governing cryptocurrency exchanges, including whether or not individuals can invest in exchange-traded funds or ETFs.

According to a report by South China Morning News dated November 3, 2018, regulations limit cryptocurrency transactions via funds or trading platforms to professional investors to at least $ 8 million.

SFC Deputy Managing Director Julia Leung Fung-yee said that a reassessment would be carried out “to see if it is still useful and if it needs to be modified”. Fung-yee said at the Hong Kong Financial Technology Week 2021 conference that “virtual assets are moving towards traditional finance” that a review of the law is needed.

“As, [and] Various types of virtual asset investment products are available, and regular overseas exchanges are now offering crypto ETFs. “

Cryptocurrency ETFs are not available to Hong Kong-based investors, although these financial instruments can be purchased from other countries. In the US, at least 12 applications for these funds have been filed with the SEC by companies seeking to offer speculators the opportunity to make digital money. Several inquiries have been made to the Hong Kong regulator by companies looking to offer such investments.

Since the SFC put these regulations in place three years ago, the digital asset has grown in popularity tremendously, with Bitcoin (BTC) up six-fold to $ 62,238 this week. The rally was fueled by large investors and funds flocking to cryptocurrencies, believing they would soon be used for payments, while retail investors joined the party to profit.

The SFC is working with the de facto central bank, the Hong Kong Monetary Authority (HKMA), to produce a unified circular following the review. According to Fung-yee, the SFC and HKMA will apply the “same business, same risks and same rules” principle to banks, brokers and digital platforms that carry out related activities.

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