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Hong Kong SFC Introduces Regulatory Requirements for Crypto Futures ETFs

The Securities and Futures Commission of Hong Kong has established new guidelines for entities seeking to launch exchange-traded funds tied to cryptocurrency futures.
Published on 2022-11-01

Hong Kong SFC Sets Requirements for Crypto Futures ETFs

The Securities and Futures Commission (SFC) of Hong Kong has introduced specific requirements for entities aiming to launch exchange-traded funds (ETFs) linked to cryptocurrency futures. In a circular issued on October 31, the regulator outlined that management companies must demonstrate a strong track record of regulatory compliance and at least three years of experience in managing ETFs or similar investment vehicles.

Focus on Bitcoin and Ethereum Futures

The SFC indicated that it may initially limit listings to ETFs tied to Bitcoin (BTC) and Ethereum (ETH) futures, aligning with the approach taken by the Chicago Mercantile Exchange (CME). This move reflects the regulator's cautious yet progressive stance on integrating cryptocurrency-based financial products into Hong Kong's market.

Enhanced Regulatory Oversight

The new guidelines underscore the SFC's commitment to ensuring investor protection while fostering innovation in Hong Kong's financial markets. By setting clear operational and experiential benchmarks, the regulator aims to maintain market integrity and stability as crypto-based ETFs gain traction.

This development highlights Hong Kong's efforts to remain a competitive and regulated hub for digital asset investments, balancing innovation with stringent oversight.

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