Hong Kong financial regulator to review retail crypto ETFs laws

With cryptocurrencies growing many folds, Hong Kong’s Securities and Futures Commission (SFC) have decided to review its 2018 rules governing virtual currency transactions.

With cryptocurrencies growing many folds, Hong Kong’s Securities and Futures Commission (SFC) have decided to review its 2018 rules governing virtual currency transactions.

In 2018, SFC allowed limited transactions of cryptocurrencies via funds or trading platforms to professional investors with at least $1 million to invest.

Commission's deputy chief executive Julia Leung Fung-yee during a seminar at the 2021 Hong Kong FinTech Week has said that as virtual assets are edging towards mainstream finance, there is a need to review the laws.

The current ETFs rules allow individual retail investors to dabble in exchange traded funds (ETFs) with exposure to virtual assets.

“More, and different types of virtual asset investment products are available and conventional exchanges overseas now offer cryptocurrency ETFs,” Julia Leung Fung-yee underlined.

Cryptocurrency ETFs don’t trade in Hong Kong, although these financial products are available overseas. 

Hong Kong SFC has received a number of inquiries to offer cryptocurrency ETFs to private bank clients and professional investors.

Not only Hong Kong, even the US Securities and Exchange Commission (SEC) has received at least 12 applications this year to launch these funds to allow speculators to dabble in cryptocurrencies.

Due to a rally by institutional investors and funds, cryptocurrencies and tokens have surged in the last few years. The value of Bitcoin has also increased six-fold since 2018 to US$68,591 this week.

She said that SFC is working with the de facto central bank the Hong Kong Monetary Authority (HKMA) with the plan of issuing a joint circular after the review.

The SFC and HKMA will adopt the principle of “same business, same risks and same rules for banks, brokers and digital platforms regarding their digital currency asset related business, '' she opined.

Due to the pandemic and work from home, people have been buying funds by using online platforms and this has accelerated the use of technology, Leung said.

According to a SFC survey, about 54% of clients had bought funds from online platforms and accounted for about one-fifth of all funds sold in Hong Kong. The number of SFC-licensed corporations selling funds online more than doubled last year.  

Jagdish Kumar
Klever Writer
Follow me on Twitter.com/TokenBharat

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