Key Takeaways:
- Top crypto experts see the SEC approving a US Bitcoin ETF as a gateway to trading those funds in Hong Kong.
- Hong Kong’s pro-crypto stance should be key in transforming the Asia Pacific region (APAC) into a global crypto hub
- Market analysts say 2023 is the year crypto regulations were formed and next year will be when they are enacted
Global financial hub Hong Kong has been touted as one of the earliest front-runners in the Asian region to grant permission for listing spot Bitcoin exchange-traded funds (ETFs) once the US approves the product.
While speaking to crypto news outlet The Block, Yat Siu, the chairman of Web3 investment firm Animoca Brands, highlighted that the city-state’s encouraging stance towards digital assets is key to setting the stage for potential spot Bitcoin ETF listings.
US SEC Granting Permission for Spot Bitcoin ETFs Would Be Key to Approving the Funds in Hong Kong
He called the Bitcoin-focused funds a “relatively uncontroversial” offering because the Hong Kong Securities and Futures Commission (SFC) said it was willing to widen the scope for digital assets last month.
Sui added that it wouldn’t be much of an issue for the SFC to follow the US Securities and Exchange Commission’s (SEC) suite because it has already done much work on the product.
Moreover, there are loads of public filings and applications that Hong Kong authorities can refer to regarding the spot Bitcoin ETFs.
Despite Beijing going all in to crack down on all cryptocurrency-related activities, including trading and mining, in Mainland China, Hong Kong has seemingly rolled out the red carpet for crypto firms.
Authorities in Hong Kong are even encouraging banks to work alongside crypto companies.
Favorable Regulations Poised to Turn Hong Kong into a Global Crypto Hub
Last year, the government released a series of policy statements on cryptocurrencies to strengthen the city-state’s position as a global financial hub.
In June, Hong Kong officially began its crypto licensing program for virtual asset trading platforms, which allowed licensed crypto exchanges to offer retail trading services in the city.
In November, Julia Leung, the CEO of Hong Kong SFC, said her agency was assessing spot crypto ETFs as it welcomes proposals that use innovative technology to boost efficiency and customer experience.
At the time of writing, Hong Kong has listed several crypto ETFs for the futures market, such as the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.
In a separate interview with The Block, Glenn Woo, the Asia Pacific region head of sales at Web3 infrastructure firm Blockdaemon, said there is positive sentiment about the chances of Hong Kong approving spot Bitcoin ETFs. Still, there remain concerns from traditional asset managers.
He says the “appetite” will grow once the US approves its first-ever spot crypto ETF but he isn’t sure whether the products will launch in Hong Kong next year or the year after.
Woo, who has over a decade of experience in Hong Kong’s traditional finance industry, noted that despite the demand for a spot Bitcoin ETF being strong, there were hesitations from potential ETF issuers.
Therefore, he has emphasized the need for collaboration between traditional financial institutions and crypto-native custody and wallet service providers to ensure the success of the product in Hong Kong.
He also pointed out liquidity as another area of concern, asking questions about how the government would define which marketplaces the asset managers can go to to procure the liquidity they need, or if they were going to allow virtual asset service providers (VASPs) in Hong Kong to provide the necessary liquidity.
Industry Experts Believe the Next Crypto Cycle Could be Led by the East
Meanwhile, Jack Tan, the co-founder of crypto exchange WOO predicts the industry’s center of gravity will shift from the West to the East next year.
He believes that the next crypto bull cycle will start from the East, with retail participation in the sector driven by South Korea, Hong Kong, and Japan.
Blockchain research firm Chainalysis’ head of policy for APAC, Chengyi Ong, labeled 2023 as the year crypto regulations took shape and 2024 as the year when the frameworks will be implemented.
Ong expects crypto regulations to be greenlit more broadly in the region. In Australia, there is an ongoing consultation paper on the regulation of crypto platforms, and in South Korea, the Virtual Asset Protection Act has been passed.
