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Spot Bitcoin and Ethereum ETFs will commence trading next week according to three asset managers.
On Wednesday, the Hong Kong branches of China Asset Management, Harvest Fund Management, and Bosera Asset Management announced their intention to launch their ETFs by 30 April.
The highly anticipated move strengthens Hong Kong as a financial hub in Asia with the regulatory approval from the Securities and Futures Commission (SFC) underscoring the legitimacy of these crypto offerings.
China has retained its ban on crypto but leans on Hong Kong as a global digital asset hub by allowing Mainland Chinese firms to submit Bitcoin ETF applications via their Hong Kong subsidiaries.
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Two key advantages present strong tailwinds to digital asset ETF issuance in Hong Kong - a pro-active regulator that has built a world-class digital asset framework and is eager to engage with forward-looking market participants, and HK government initiatives to develop the city as a web3 and blockchain hub.
Hong Kong has long been at the forefront of crypto regulation in Asia. Bitcoin ETFs open up the audience of people and institutions that can buy and sell Bitcoin to those with little experience trading cryptocurrency in a compliant and regulated environment.
The ETF would have two main initial benefits: increased distribution in Hong Kong and increased credibility of crypto as an asset class in its own right. It could also potentially bring more liquidity to the Bitcoin market, facilitate more efficient price discovery, attract a broader investor base, and possibly reduce price volatility through increased institutional participation.
The Hong Kong Securities & Futures Professionals Association (HKSFPA) is also considering a self-regulatory committee to oversee compliance in its crypto industry.
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HKSFPA highlighted how there is no organization dedicated to the development of Hong Kong’s financial market industry and that current regulatory practices focus on supervision rather than coordination.
The officials proposed that the Securities & Futures Commission (SFC) could oversee market conduct but could also entrust industry players with its licensing authority.
Hong Kong is also tightening up its local crypto scene to provide a safer environment for traders. Hong Kong police arrested 72 people in connection with the JPEX scandal, which marked the city's biggest case of financial fraud. Three people were also arrested for their involvement in a HK$1.8 billion money-laundering scheme.
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