Johnny Ng Kit-chong, a member of Hong Kong’s Legislative Council, emphasized the need for the jurisdiction to “take the initiative” in implementing spot crypto-ETFs.
美國證券交易委員會SEC在香港時間凌晨通過現貨比特幣ETF。此舉對虛擬資產市場是一個重要的舉動，也吸引更多傳統投資者和資金參與虛擬資產領域投資。經過這次SEC通過現貨比特幣ETF，我認為香港也要在虛擬資產領域敢於做「領頭羊」，通過創新政策來帶領整個行業發展。
1. 特區政府盡快推動現貨ETF的落實… pic.twitter.com/5b0fhHFQHh
— Johnny Ng 吴杰庄 (@Johnny_nkc) January 11, 2024
“I hope that Hong Kong, amidst the rapid development and fierce competition in the virtual assets sector, can quickly take a leading position globally. Specifically, to take a leading role in implementing relevant policies and products in Asia. This provides an opportunity to strengthen Hong Kong’s position as a global cryptocurrency hub,” he emphasized.
The comment followed the approval by the SEC of 11 applications for spot exchange-traded funds based on digital gold.
Earlier, COO of HashKey, Livio Weng, announced plans by a dozen investment firms in Hong Kong to launch spot Bitcoin-ETFs.
According to him, potential issuers include firms with Chinese capital as well as from other Asian and European countries.
Seven or eight companies have already begun consultations with the Hong Kong Securities and Futures Commission (SFC) and have formed teams to develop products.
In December 2023, regulators in the jurisdiction opened the possibility for launching exchange-traded crypto funds based on spot prices.
Animoca Brands co-founder Yat Siu predicted a significant impact of the approval of spot Bitcoin-ETFs in the US on the development of digital assets in Asia. The expert explained his position by the efforts of local legislators.
“There is clarity in regulation and a willingness by governments and regulators to build this ecosystem, participate, and see the opportunities that [exist] there,” he explained.
Siu emphasized that Asian investors are generally more open to capitalism compared to their counterparts in the US, pointing to the successes of regional countries in developing their economies.
The co-founder and COO of SmashFi agreed with Siu.
“Asian investors have always been more enterprising than their Western counterparts since the early days of Bitcoin. ETFs are the perfect blend of cryptocurrency and regulation, easing the concerns of institutional investors who have been seeking a legitimate way to build a digital asset portfolio,” he explained.
Experts surveyed by The Block pointed to Hong Kong’s good chances of regaining its position as a hub. In their opinion, this jurisdiction will be the next to register a spot crypto-ETF in Asia.
“Hong Kong regulators have already sent a clear signal that there is a desire to consider such instruments, including for retail trading. The next step is to align regulatory requirements and industry expectations […] to make this a reality,” explained Angela Ang, senior policy advisor at TRM Labs.
Singapore could pose competition to Hong Kong.
“The mature regulatory environment of the jurisdiction provides a [foundation] for overseeing structured spot crypto products,” commented Wayne Huang, co-founder and CEO of XREX.
Ko Jangdeok, CEO of SBINFT, part of the SBI Group, expects significant regulatory changes in Japan in the near future.
“The approval of spot ETFs in the US is likely to have a very positive impact on policymakers in Japan. It would not be surprising to see an acceleration of discussions on a Japanese version of an ETF,” he explained.
Experts noted limitations such as a lower volume of capital in the industry compared to the US, as well as potential conservatism of regional regulators.
“Hong Kong and Singapore have become more cautious […] especially after residents suffered losses from the collapses of JPEX and FTX,” explained Patricia Ho, chief legal counsel at Scroll.
According to her, in the short term, one can expect an increase in enforcement practices in Hong Kong, in the medium and long term — a growth in investor interest in virtual assets, SFC approval of relevant trading platforms, and the adoption of legislation regarding stablecoins.
The situation in South Korea stands apart. In the country, local financial institutions are prohibited from owning and purchasing cryptocurrencies, as well as investing in companies offering digital assets.
According to local media, the FSC confirmed its commitment to a rule that restricts the launch of Bitcoin-ETFs. According to its representative, the approval of the product in the US is not a factor for revising the regulatory regime. The reasons for maintaining the restrictions include the desire to maintain financial market stability and investor protection.
In June 2023, South Korea’s parliament passed a law on the protection of digital asset users.
The document combined 19 different bills related to cryptocurrencies. It defined liability for offenses such as insider trading, market manipulation, and unfair trading practices.