Hong Kong will allow retail investors to participate in exchange-traded funds (ETFs) that invest directly in cryptocurrencies. The Securities and Futures Commission (SFC) is ready to authorize funds that invest directly in virtual assets, including spot virtual asset ETFs, according to a joint circular issued by the securities regulator and the Hong Kong Monetary Authority.
The circular states that spot crypto investment products should comply with the requirements of Hong Kong regulators for mutual funds and other structured investment products.
The SFC added that product issuers should also have “a good track record in regulatory compliance” and employ “at least one competent employee with relevant experience in [virtual assets] or related product management.” The regulator will also establish a list of permitted tokens that funds are allowed to hold, which can also be spot traded on Hong Kong’s approved crypto exchanges.
After announcing in October last year that the city aims to become a global hub for virtual assets, Hong Kong authorities have developed a new regulatory regime for centralized exchanges that allows licensed platforms to accept retail investors. So far, only two companies have received licenses, and applications from nine more are awaiting approval.