Author of the article: Meta Era guest author 0x ShinChan
After years of twists and turns, the U.S. Securities and Exchange Commission (SEC) finally approved the first-ever spot Bitcoin exchange-traded fund (ETF) last week. The ETF had a strong first day of trading, with trading volume reaching a staggering $4.6 billion, providing a boost to the cryptocurrency industry. The approval of the listing of a Bitcoin spot ETF in the United States has boosted the entire cryptocurrency market, with the market holding positive expectations for the future.
At the same time, Hong Kong, an international financial center and the fourth largest ETF market in Asia (excluding Japan), has established a regulatory system for crypto assets since 2022. The Hong Kong SAR government has made it clear that Hong Kong will actively embrace crypto assets. This raises a question: In the context of the coming era of Bitcoin spot ETFs, will Hong Kong become a pioneer in leading the trend? This article will take a closer look at the factors involved and the potential impact this could have on the region’s evolving cryptocurrency landscape.
Hong Kong supervision enters a new era: virtual asset investment channels gradually open to retail investors
In December 2022, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) issued a joint statement stating that since the SFC formulated the professional investors only regulatory guideline in 2018, the field of virtual assets has developed rapidly , investment products have become diversified, providing retail and professional investors with ways to invest in virtual assets.
Joint Circular on Virtual Asset Related Activities of Intermediaries (Link）
Hong Kong has relaxed regulations on cryptocurrencies in recent years, and regulators have also changed their stance on openness to retail investors in digital assets. In October 2023, SFC updatedregulatory guidelines, allowing a wider range of investors to participate in spot cryptocurrency and ETF investments.
In November 2023, the SFC is moving towards allowing retail investors to purchase spot cryptocurrency exchange-traded funds (ETFs). according toBloombergQuoted, SFC CEO Elsie Leong said: We welcome proposals to use innovative technologies that improve efficiency and customer experience. We are willing to try them as long as new risks are addressed. Our approach is consistent across assets.
Hong Kong may usher in a revolution in the cryptocurrency market
The successful launch of a U.S. spot Bitcoin ETF is expected to help bring Hong Kong regulators closer to their goal of authorizing similar cryptocurrency funds to operate in the city. Spot cryptocurrency ETFs enable investors to gain exposure to virtual assets without purchasing any crypto tokens directly.
Livio Weng, chief operating officer of HashKey Group, revealed in an interview with Chinese media Caixin on Wednesday that about 10 fund management companies are preparing to launch ETFs backed by physical virtual assets in Hong Kong, and as many as eight of them are already in the advanced stage.
Mao Shixing, co-founder and CEO of Cobo, a digital asset custody solution provider, said that Hong Kong needs to launch a spot virtual asset ETF as soon as possible to ensure that the city remains competitive in the global cryptocurrency market and strengthen its position as a global financial center. .
Mao said the U.S. approval could influence other jurisdictions because the SEC is one of the most influential and reputable financial regulators in the world, adding that the agencys initiatives often serve as a catalyst for financial regulators in other countries and regions. important reference.
The Block reported that Animoca Brands co-founder and chairman Yat Siu said that the U.S. SEC-approved Bitcoin spot ETF may have a greater impact on the Asian cryptocurrency market. Asia, especially younger generations, are more open to capitalism, and U.S. ETF approval could have a positive impact in the region. Financial centers such as Hong Kong and Singapore may be the next targets for the launch of spot cryptocurrency ETFs.
Hong Kong Legislative Council member Wu Kit-chuang called on the Hong Kong SAR government to speed up the approval of spot Bitcoin ETFs after the United States approved spot Bitcoin ETFs. Wu Jiezhuang pointed out that the Hong Kong Securities and Futures Commission had previously stated that it was ready to accept applications for Bitcoin ETFs: I hope that with the rapid development and fierce competition of virtual assets, Hong Kong can occupy a place in the world as soon as possible. This will be the first place in Asia This is the first opportunity to implement relevant policies and products, and consolidate Hong Kong’s opportunity to become a global center for virtual assets.”
Legislative Council member Wu Kit-chuang posted on Twitter
Looking forward to the new landscape of Web3: Hong Kong may become Asia’s first spot Bitcoin ETF pioneer
Currently, in addition to the United States, there are 8 markets around the world that allow spot cryptocurrency ETFs, including Canada, Germany, Switzerland, as well as the Cayman Islands in the Caribbean and Jersey near the northwest coast of France.
As talk of a spot Bitcoin ETF in Asia continues to heat up, crypto exchange WOO predicts that the center of the industry will shift from the West to the East next year.
Jack Tan, co-founder of WOO, said: The last cycle was mainly driven by the West, whether it was Saylor adding Bitcoin to Microstrategys balance sheet or PayPal promoting various cryptocurrencies to millions of retail investors. However, we believe the next cycle will be dominated by the East, with retail participation led by key regions such as South Korea, Hong Kong and Japan.
Chengyi Ong, head of Asia Pacific policy at blockchain research firm Chainalysis, marked 2023 as the year of regulation in the region, with actual implementation expected in 2024. Over the coming year, we expect to see these regulatory frameworks introduced in 2023 taking shape,
“This is not just limited to leading jurisdictions such as Singapore and Hong Kong, but also the wider region,” Ong said in a statement shared with The Block. “For example, in Australia, there are ongoing efforts to regulate digital asset platforms. An ongoing consultation. In South Korea, the Virtual Asset User Protection Act has been passed. By 2024, we will start to see these frameworks actually implemented, which will take some time.”
Judging from the process of approving Bitcoin spot ETFs in the United States, from U.S. officials questioning whether these products will exacerbate cryptocurrency fraud and market manipulation, U.S. regulators have continued to refuse to approve Bitcoin ETFs over the past decade, to companies like Blackstone Group Wall Street giants and some court rulings that were favorable to the encryption industry finally reversed the situation of Bitcoin ETFs in the United States.
Hong Kong, one of many jurisdictions trying to develop a digital asset hub, may face a similar scenario as it pursues its own homegrown Bitcoin ETF. But the difference from the United States, which is going against the trend, is that the Hong Kong government is actively embracing the wave brought about by virtual assets. More than that, with the advancement of relevant policies in Asian countries, the environmental conditions for the compliant growth of Web3 are gradually being established and improved. A new cycle has arrived, and the East is ready to blow the horn for a new narrative.
[ 1 ] https://www.scmp.com/tech/tech-trends/article/3248282/hong-kong-needs-speed-approval-spot-cryptocurrency-exchange-traded-funds-after-us-launch-industry