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HomeLaw & PoliticsHong Kong's Monetary Authority Issues Instructions For Crypto Futures ETFs

Hong Kong’s Monetary Authority Issues Instructions For Crypto Futures ETFs

The Securities and Futures Commission of Hong Kong has established standards that must be met by organisations who are contemplating making a public offering of an exchange-traded fund (ETF) that is related to cryptocurrency futures.

In a circular dated October 31st, the Securities and Futures Commission (SFC) stated that in addition to the requirements that had previously been imposed on unit trusts and mutual funds for authorization of a crypto futures ETF, management companies in Hong Kong would need to “have a good track record of regulatory compliance” as well as three years of experience managing ETFs, taking into consideration other investment vehicles that are similar. 

This was in addition to the requirements that had previously been imposed on unit trusts and mutual funds The financial regulator gave the impression that it will follow in the footsteps of the Chicago Mercantile Exchange by only initially permitting listings of exchange-traded funds (ETFs) connected to Bitcoin BTC tickers down $20,631 and Ether ETH tickers down $1,598 futures.

“Only [virtual asset, or VA,] futures traded on conventional regulated futures exchanges are allowed, subject to the management company demonstrating that the relevant VA futures have adequate liquidity for the operation of the VA Futures ETF and the roll costs of the relevant VA futures contracts are manageable and how such roll costs will be managed,” said the SFC.

The announcement that Hong Kong’s government was “ready to engage” with global crypto exchanges on regulatory problems occurred as part of an update to its policy on October 31, and the Securities and Futures Commission (SFC) circular was issued as part of that announcement. The government has said that it intends to launch a variety of pilot initiatives, some of which are aimed at creating non fungible tokens, tokenizing green bonds, and a digital Hong Kong currency.

Despite the fact that the political borders between the special administrative territory and its neighbouring countries have become increasingly blurry in recent years, the goals of Hong Kong’s foreign policy would appear to place it on a course that is distinct from China’s. The Chinese government has taken stricter measures against cryptocurrency businesses operating inside the nation, but it is continuing to go ahead with testing its digital currency for the central bank, known as the digital yuan.

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Jeewan Singh is CryptoShrypto’s content writer and a seasoned writer with over two years of experience in writing about Indian Securities Market. Jeewan's participation in Blockchain and Cryptocurrency started in late 2020, and he hasn't looked back since. The technical and economic outcomes of cryptocurrency are what spark his curiosity, and he keeps one eye on the market.


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