Regulation

Hong Kong financial regulator issues guidelines for crypto futures ETFs

The Securities and Futures Fee of Hong Kong has arrange necessities for entities contemplating a public providing of an exchange-traded fund (ETF) tied to cryptocurrency futures.

In an Oct. 31 round, the SFC said that along with beforehand imposed necessities on unit trusts and mutual funds for authorization of a crypto futures ETF, administration corporations in Hong Kong would wish to “have a great monitor document of regulatory compliance” in addition to three years of expertise managing ETFs, with consideration for comparable funding autos. The monetary regulator hinted it might observe within the Chicago Mercantile Trade’s footsteps by solely initially permitting listings of ETFs linked to Bitcoin (BTC) and Ether (ETH) futures.

“Solely [virtual asset, or VA,] futures traded on typical regulated futures exchanges are allowed, topic to the administration firm demonstrating that the related VA futures have enough liquidity for the operation of the VA Futures ETF and the roll prices of the related VA futures contracts are manageable and the way such roll prices will likely be managed,” stated the SFC.

The monetary regulator added that the web spinoff publicity of any crypto futures ETF “shall not exceed 100% of the ETF’s complete web asset worth,” and firms ought to count on to undertake an lively funding technique to account for incidents together with market disruptions. The SFC additionally stated ETF issuers had been to “perform intensive investor training” earlier than the launch of any crypto funding automobile in Hong Kong.

The SFC round got here as a part of a coverage replace from Hong Kong’s authorities, which announced on Oct. 31 that it was “prepared to interact” with world crypto exchanges on regulatory points. The federal government stated it deliberate to launch a lot of pilot initiatives, together with these aimed toward nonfungible tokens, inexperienced bond tokenization, and a digital Hong Kong greenback.

Christopher Hui, Hong Kong’s secretary for monetary providers and the reasury, stated:

“We recognise the potential of DLT and Net 3.0 to turn into the way forward for finance and commerce, and underneath correct regulation they’re anticipated to boost effectivity and transparency. The Authorities is ready to embrace this future, and we welcome the clustering of Fintech and VA neighborhood and abilities in Hong Kong, and we are going to promote the sustainable improvement of monetary providers throughout the entire VA worth chain.”

Associated: Not like China: Hong Kong reportedly desires to legalize crypto buying and selling

Hong Kong’s coverage goals would seemingly put it on a special path than China, regardless of the political traces between the particular administrative area and bordering nation turning into extra blurred lately. The Chinese language authorities has cracked down on crypto corporations working within the nation however continues to maneuver ahead with piloting its central financial institution digital forex, the digital yuan.

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