Hong Kong is examining allowing the launch of spot cryptocurrency exchange-traded funds (ETFs), given that the risks of these instruments are addressed. In a recent interview, Julia Leung, CEO of the Hong Kong Securities and Exchange Commission, stated that the focus of the organization’s approach was “consistent” regardless of the asset.
Hong Kong Open to Allowing Trade of Spot Crypto ETFs
Hong Kong may be open to allowing the launch of trading spot cryptocurrency-based exchange-traded funds (ETFs). According to Julia Leung, CEO of the Hong Kong Securities and Exchange Commission, the city is considering permitting the issuance of such products, given that the risks are adequately managed.
In a recent interview, Leung stated:
We welcome proposals using innovative technology that boosts efficiency and customer experience. We’re happy to give it a try as long as new risks are addressed. Our approach is consistent regardless of the asset.
While the city already allows the trading of futures-based cryptocurrency ETFs, the reach has been limited, with only three offerings managing around $65 million, a number that is dwarfed by the overall size of the local ETF market.
In addition, Hong Kong is also taking steps to allow the issuance of tokenized real-world assets for retail investors, opening the path for a larger market to access these instruments.
On this, Leung explained:
As the crypto ecosystem evolves step-by-step to the point where we’re comfortable, then we’re happy to open up more access to the wider investing public.
Hong Kong vs U.S.
The open stance of Hong Kong contrasts with the posture of regulators in the U.S., which have repeatedly denied approval for the launch of a spot bitcoin ETF. Nonetheless, a legal victory obtained in October by Grayscale, in which the U.S. Court of Appeals for the D.C. Circuit ordered the U.S. Securities and Exchange Commission (SEC) to reconsider Grayscale’s ETF conversion application, has experts optimistic about an upcoming approval of a spot bitcoin ETF.
United States Securities and Exchange Commission Chair Gary Gensler recently acknowledged that his organization is currently sitting on top of 8-10 ETF applications. Gensler stressed the commission would review each one without prejudgement.
Lawmakers have also pushed against the SEC’s actions. In September, U.S. Representatives Mike Flood, Tom Emmer, Wiley Nickel, and Ritchie Torres directed a letter to the SEC, asking for the swift approval of a bitcoin ETF and stating that the institution’s position was “untenable” moving forward.
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