Hong Kong urged to expedite approval of spot cryptocurrency ETFs following U.S. launch

Hong Kong should soon follow the United States’ lead in authorizing spot cryptocurrency exchange-traded funds (ETFs), bolstering the city’s ambition to become a major virtual-asset hub in Asia.

Hong Kong is facing calls to accelerate the approval process for spot cryptocurrency exchange-traded funds (ETFs) following the successful launch of similar products in the United States. Despite the Securities and Futures Commission’s (SFC) readiness to authorize retail access to spot virtual asset ETFs in December, Hong Kong has fallen behind the U.S. in implementing these financial instruments.

Industry insiders emphasize the importance of prompt approvals to enhance the city’s competitiveness in the global cryptocurrency market and solidify its position as a major virtual asset hub in Asia.

While the SFC expressed its preparedness to authorize retail access to spot virtual asset ETFs, the actual launch has lagged behind the U.S. U.S.-listed spot bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust, which began trading recently, with substantial trading volumes, marking a significant milestone for the cryptocurrency industry.

The success of these ETFs in the U.S. is expected to prompt Hong Kong regulators to expedite approvals for similar cryptocurrency funds, enabling the city to remain competitive globally.

Spot cryptocurrency ETFs provide investors with exposure to virtual assets without the need to directly purchase crypto tokens. The launch of such funds is seen as a step towards legitimizing the crypto industry and fostering collaboration with mainstream finance. Industry experts anticipate that Hong Kong will accelerate bitcoin ETF applications in the coming months to capitalize on the growing demand for cryptocurrency investments.

According to Livio Weng, Chief Operating Officer at HashKey Group, around 10 fund management firms in Hong Kong are preparing to launch spot virtual asset-backed ETFs. Up to eight of these companies are reportedly at an advanced stage in the process. Urging swift action, industry leaders emphasize the need for Hong Kong to stay competitive and strengthen its position as a global financial centre within the cryptocurrency market.

The recent approval of spot bitcoin ETFs in the U.S. has raised expectations globally. The U.S. Securities and Exchange Commission’s (SEC) influential decision is likely to influence regulatory approaches in other jurisdictions. While acknowledging the impact of the SEC’s decisions, industry leaders highlight the importance of each country and region maintaining its independent stance and regulatory objectives.

Hong Kong’s pursuit of becoming a major virtual asset hub aligns with its broader ambitions in the global financial landscape. However, the city faces increasing pressure to keep pace with international developments, especially in the rapidly evolving cryptocurrency sector. As discussions around the approval of spot virtual asset ETFs gain momentum, Hong Kong’s regulatory decisions will play a crucial role in shaping its standing within the global cryptocurrency market.