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Hong Kong Details New Crypto Futures ETF Rules for Issuers

Hong Kong Details New Crypto Futures ETF Rules for Issuers

The Hong Kong regulator has outlined the fundamental standards that exchange-traded fund managers must achieve in order to sell cryptocurrency products in the city.

The list is part of a more significant push by city authorities to re-establish Hong Kong as a virtual asset hub. On Monday, the finance minister and other top officials unveiled efforts to encourage crypto-related businesses, including simpler trading laws. The regional administration of Hong Kong also re-emphasized its involvement in China’s overall test with central bank digital currency.

Crypto futures ETFs with underlying assets in products related to bitcoin and ether futures listed on the Chicago Mercantile Exchange (CME) were among the initiatives unveiled today by Securities and Futures Commission Deputy CEO Julia Leung at Hong Kong Fintech Week.

After the discussion ended for the day, the SFC issued a circular outlining what it anticipated from any ETF provider seeking regulatory clearance to offer a futures cryptocurrency product in Hong Kong.

  • Any product must adhere to the rules that govern unlisted structured products, unit trusts, and mutual funds.
  • The ETF issuer must have a least three-year track record and regulatory compliance record.
  • Issuers must demonstrate that digital asset ETFs have enough liquidity.
  • Net derivative exposure cannot go beyond 100% of the entire net asset value of the ETF.
  • Before launching, issuers must conduct investor education efforts.

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