Hong Kong is on the brink of approving spot crypto ETFs, with nearly a dozen hedge funds preparing to submit applications for this new financial product. HashKey Group COO Livio Weng disclosed in an interview with Chinese news outlet Caixin that around twelve hedge funds are gearing up for the launch of spot crypto exchange-traded funds (ETFs) in Hong Kong. This move positions the city as the first market in Asia to allow the listing of these financial products.

The timeline for Hong Kong regulators to approve these applications is still uncertain, but Weng mentioned that up to eight hedge funds are already in the “actual advancement stage,” although specific details were not provided.

This development follows a joint circular issued by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) in December 2023, where the regulators acknowledged the increasing interest in launching spot crypto ETFs. The SFC expressed readiness to accept applications for funds with exposure to cryptocurrencies, including spot crypto ETFs.

It’s important to note that Hong Kong has already granted permission for futures crypto ETFs in the region, such as Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF. These ETFs are accessible to Hong Kong investors with portfolios exceeding $2 million through UBS’ local branch.

While financial regulators in Hong Kong express their willingness to consider the approval of spot crypto ETFs, their overall stance on the broader crypto market appears to be cautious.

In late December 2023, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) issued a joint statement allowing retail investors to purchase stablecoins. However, stablecoin issuers must obtain a special HKMA license before offering their services in the region. Licensing requirements include full backing of all stablecoins in circulation, proper segregation and custody of reserve assets, transparent disclosure practices, and regular reporting.

Stablecoin issuers seeking approval will also need to establish a physical presence in Hong Kong by opening an office with key personnel to ensure compliance with regulatory standards and effective oversight.

For more updates on the cryptocurrency market, stay tuned to Global Crypto News.

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