Hong Kong Considers Allowing Retail Cryptocurrency ETF Investments

As cryptocurrencies gradually become a major part of mainstream finance, Hong Kong financial regulators are considering whether to modify its 2018 crypto rules to allow retail investors to invest in crypto exchange-traded funds (ETF).

Julia Leung Fung-yee, the Deputy Chief Executive of the country’s Security and Futures Commission (SFC), disclosed this at a seminar during the 2021 Hong Kong FinTech Week, as reported by local news outlet, the South China Morning Post (SCMP).

Hong Kong’s previous rule about cryptocurrency investing permits only professional investors who are worth at least HK$8 million ($1.027 million).

However, cryptocurrency investments have continued to go mainstream with different types of crypto-related products, including Bitcoin ETFs being launched across exchanges based overseas.

Following the rapid growth in crypto-related products, Hong Kong SFC is considering whether its 2018 crypto rules should still be in use or require modification.

After the review, the SFC will work with the Hong Kong Monetary Authority (HKMA) to issue a joint circular.

Rising Interest in Cryptocurrency ETFs

At the time of writing, crypto ETFs have still not gotten the approval to trade in Hong Kong.

However, various overseas markets, including the United States, have received numerous applications to launch the product.

Just last month, the United States joined Canada and Brazil to approve its first Bitcoin fund, an investment that tracks the price of the world’s largest cryptocurrency and is traded on a regulated stock exchange, giving investors indirect exposure to the asset class.

Investors Gain Bitcoin Exposure via Online Platforms

Although Hong Kong has not allowed the trading of Bitcoin funds within its region, both retail and institutional investors are still dabbling in the investment vehicle via online brokers.

Per a survey conducted by the SFC, about 54% of Hong Kong traders had purchased funds from various online platforms and online sales accounted for about one-fifth of all funds sold in the Chinese administrative region, the report added.

“Some licensed firms wish to provide cryptocurrency trading services to clients either by acting as an introductory agent or through an omnibus account arrangement opened on a virtual asset platform,” Leung added.