Author: Mlixy; Source: W3C DAO
Recently, a noisy week finally came to an end with the US Securities and Exchange Commission finalizing its approval for the listing of a spot Bitcoin ETF.
Now, investors are beginning to turn their attention to another market full of potential, Hong Kong.
Previously, the Hong Kong Securities and Futures Commission mentioned in a circular that it was "ready to accept applications for virtual asset spot ETFs." Luo Boren, head of securities product development at the Hong Kong Stock Exchange (00388), pointed out that the Hong Kong Stock Exchange is ready to seize the opportunities brought by thematic investment and will work closely with issuers and all stakeholders to smoothly introduce this type of ETF into the Hong Kong ETF market. New product.
He said that he welcomed the announcement of the Hong Kong Securities and Futures Commission,making Hong Kong the first market in Asia to allow the listing of virtual asset spot ETFs, strengthening Hong Kong’s role as a regional Hong Kong’s status as a leading digital asset center supports Hong Kong’s continued development as Asia’s premier ETF market.
According to Bloomberg, Hong Kong financial services company Venture Smart Financial Holdings Ltd. (VSFG) said it plans to propose to the Hong Kong Securities and Futures Commission to launch direct investment Application for Bitcoin ETF. “This is a market with huge potential.”
Brian Chan, head of the company’s investment and product group, said. "Our goal is to reach US$500 million in assets under management by the end of this year."
The Hong Kong Securities and Futures Commission said that except for the guidance issued in December 2023, there will be no Post any comments. If the history of traditional ETFs is any guide, the approval process for such products can take weeks to months.
According to its website, VSFG provides traditional and digital wealth management services and is one of the first virtual asset management companies in Hong Kong to receive approval from the Securities and Futures Commission.
Bitcoin is a Centralized digital currency has been attracting attention and pursuit from global investors since its birth.
However, Bitcoin's market volatility is high, the regulatory environment is unclear, and transaction thresholds are high. These factors have limited the popularity and development of Bitcoin.
In order to solve these problems, a new financial product has emerged, that is, Bitcoin ETF (Exchange Traded Fund, Exchange Traded Fund). Bitcoin ETF is a fund listed and traded on a traditional stock exchange, which allows investors to participate in Bitcoin investment more conveniently and safely at lower costs and risks.
Hong Kong currently allows futures-based cryptocurrency ETFs. There are currently three listed ones, namely CSOP Bitcoin Futures and CSOP Bitcoin Futures. OP Ether Futures and Samsung Bitcoin Futures.
Their total assets are relatively small, about $50 million. Samsung Asset Management said it would not rule out exploring the possibility of launching a spot ETF.
Bitcoin ETFs are mainly divided into two types: Bitcoin futures ETFs and Bitcoin spot ETFs. Bitcoin futures ETFs refer to funds that invest in Bitcoin futures contracts, while Bitcoin spot ETFs refer to funds that directly hold Bitcoin.
Globally, the development of Bitcoin ETFs is still in its infancy, and currently only a few countries and regions have approved the listing of Bitcoin ETFs.
Among them, Hong Kong, as Asia's financial center, has recently issued a series of regulatory policies on virtual assets, clearly stating that it is "ready to accept the recognition of virtual asset spot ETFs" Apply".
This move has attracted widespread attention from the market and is considered a major breakthrough for Bitcoin ETFs. It is also the formalization, legalization and adoption of Bitcoin. important sign of recognition.
Bitcoin spot ETF refers to funds that directly hold Bitcoin. Investors in Bitcoin spot ETF can enjoy the ownership and use rights of Bitcoin, and can also more accurately reflect the market value of Bitcoin.
However, Bitcoin spot ETFs also face higher technical and regulatory challenges, such as how to store and transfer Bitcoin securely and how to prevent money laundering and terrorist financing, etc.
On December 22, 2023, the Hong Kong Securities and Futures Commission issued the "Circular on SFC-authorized funds investing in virtual assets" (hereinafter referred to as " Fund Circular"), clearly stating that it is "ready to accept applications for recognition of virtual asset spot ETFs." This is another important regulatory policy for virtual assets by the Hong Kong Securities and Futures Commission following the issuance of the "Joint Circular on Virtual Asset-related Activities of Intermediaries" (hereinafter referred to as the "Joint Circular") in October 2023.
The Fund Circular mainly stipulates the regulatory requirements and issuance conditions of Hong Kong Bitcoin Spot ETF, which mainly includes the following aspects:
Issuer Qualifications:Asset management companies that issue virtual asset fund products need to meet the following three conditions: have a good regulatory compliance record; the company has at least one competent employee with experience in virtual asset and related product management; the company needs to hold The upgraded No. 9 license complies with the "Standard Terms and Conditions Applicable to Licensed Corporations Managing Portfolios Investing in Virtual Assets".
Underlying asset requirements:The underlying assets of virtual asset spot ETFs must be currently available for trading by retail users on a licensed exchange in Hong Kong virtual assets. Currently, this means that only Bitcoin and Ethereum are eligible.
Subscription, redemption and transaction of spot virtual assets: Virtual asset spot ETFs can be submitted and redeemed in two modes: cash or physical objects, but Must be conducted at a licensed exchange or other regulated financial institution in Hong Kong. Traders participating in redemptions need to hold an upgraded No. 1 license, which means complying with the "Standard Terms and Conditions for Licensed Corporations that Manage Portfolios Investing in Virtual Assets."
Custody: Virtual assets must be hosted by a third-party independent custodian, which must be a licensed exchange in Hong Kong or other regulated financial institutions. The custody account must be separated from the asset management company's own account. Most of the assets are placed in the cold wallet, and a small amount is placed in the hot wallet for redemption. Private keys must be kept securely and stored in Hong Kong to effectively prevent external attacks and be properly backed up.
According to Hong Kong’s licensed virtual Weng Xiaoqi, CEO of HashKey Exchange, one of the asset trading platforms, revealed thatabout 10 fund companies are currently preparing to launch virtual asset spot ETFs in Hong Kong, and about 7 to 8 are already in the actual advancement stage.
It is reported that issuers may need to use licensed exchanges to manage underlying assets and provide trading, clearing and other services. Several issuers have chosen Hashkey provides infrastructure for it, and Hashkey will even work with issuers to apply for a spot Bitcoin ETF license.
OKX Global Chief Commercial Officer Jimmy Lai said that the issuance ofBitcoin ETF in the United States means that different types of traditional investment instruments, such as large-scale funds such as pensions and retirement funds, can now invest directly in Bitcoin , representing investors from a wider range of backgrounds including retail and institutions, can participate in the Bitcoin market.
In addition, Bitcoin ETFs are settled in kind, and the capital invested in such ETFs will have a more direct impact on the spot price of Bitcoin. It will bring positive attention to the virtual asset market and a large amount of capital inflow, playing a key role in the long-term development of the industry.
Wang Yi, Director of the Quantitative Investment Department of CSOP, one of the issuers of Hong Kong virtual asset futures ETFs, also said that after the US SEC approves spot ETFs, traditional financial institutions can Spot ETFs buy Bitcoin, further increasing market demand for Bitcoin. Since the total supply of Bitcoin is limited, increased demand may push up the price of Bitcoin.
Chen Peiquan, executive director of Victory Securities, a licensed virtual asset brokerage in Hong Kong, pointed out that the U.S. regulatory agency allows the listing of spot Bitcoin ETFs, which is regarded as an agreement between virtual currencies and physical exchanges. The key to connection is bound to attract more investors to participate.
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