Hong Kong announced the opening of the Bitcoin Spot ETF (Exchange-Traded Fund) on December 22, 2023, in two circulars issued by the Hong Kong Securities Regulatory Commission. Regarding the issuance of Bitcoin spot ETFs, the following key requirements need to be met:

1. Issuer qualifications: Must have a good regulatory compliance record, at least one employee has experience in virtual asset and related product management, and the company must hold an upgraded No. 9 license.

2. Asset base requirements: The underlying assets must be available for trading by retail users on a licensed exchange in Hong Kong.

3. Investment strategy: Passive fund form, no leverage is allowed.

4. Subscription, redemption and transaction: both cash and physical modes are allowed, subject to money laundering regulations and KYC/AML review.

5. Custody: Independent third-party custody is required, and most assets are stored in cold wallets.

6. Valuation: The index used for valuation calculation can be a major overseas exchange without special restrictions.

7. Risk disclosure and investor education: Issuers are required to conduct risk disclosure and investor education.

8. Review system: approval from the China Securities Regulatory Commission is required before issuance.

9. Restrictions on investors: Product sales must comply with the requirements of the jurisdiction, such as prohibiting sales to investors in China.

Overall, Hong Kong’s policy has two important meanings: first, it clarifies the Hong Kong market’s regulatory policy for virtual asset spot ETFs; second, it is different from the US SEC’s cash redemption and redemption, allowing both cash redemption and physical redemption. This gives Hong Kong’s BTC spot ETF more advantages in the international market.

🔍 Hong Kong announced the opening of#Bitcoinspot ETFs in 2023, clarifying regulatory requirements! 🌐 Issuers need to be compliant, in the form of passive funds, with strict custody and flexible valuation. 💡Different from the US SEC, Hong Kong allows cash and in-kind redemptions, improving competitiveness. $🚀