Hong Kong's Finance Regulator Publishes Guidelines For Cryptocurrency Futures ETFs

By originally only allowing listings of ETFs connected to Bitcoin and Ether futures, the Securities and Futures Commission gave the impression that it would follow the CME's lead.

For organizations proposing a public offering of an exchange-traded fund (ETF) linked to cryptocurrency futures, the Securities and Futures Commission of Hong Kong has established regulations.

According to a circular issued by the SFC on October 31, management companies in Hong Kong would also need to "have a good track record of regulatory compliance" and three years of experience managing ETFs, with consideration for similar investment vehicles, in order to meet the prerequisites previously imposed on unit trusts and mutual funds for authorization of a crypto futures ETF. By originally only permitting listings of ETFs related to Bitcoin, the financial regulator gave the impression that it would follow the lead of the Chicago Mercantile Exchange.

The Hong Kong government said on October 31 that it was "ready to engage" with international crypto exchanges on regulatory matters as part of a policy update, which included the SFC circular. According to the government, it will start a number of pilot projects to test nonfungible tokens, the tokenization of green bonds, and a digital Hong Kong currency.

Christopher Hui, Hong Kong’s secretary for financial services and the treasury, stated:

“We acknowledge that Web 3.0 and DLT have the potential to transform finance and business in the future, and with the right regulations in place, they should increase efficiency and transparency. The Hong Kong government is ready to embrace this future, and we welcome the concentration of Fintech and VA talent and community there. We will also work to further the sustainable growth of financial services throughout the whole VA value chain.”

Although the political boundaries between the Special Administrative Region and the countries bordering it have become increasingly blurred in recent years, Hong Kong's political goals appear to follow a different path than China's. While cracking down on active cryptocurrency companies, it is piloting the digital yuan, the central bank's digital currency.