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Hong Kong Doubles Down on Web3 as Funds Seek Approval for Retail Crypto ETFs

Hong Kong is continuing its push to cement its status as a regional crypto hub amid competition with Singapore.

According to a report by Nikkei Asia, which cited people familiar with the matter, three asset management companies – CSOP Asset Management, Samsung Asset Management, and Mirae Asset Global Investments – have applied with the Hong Kong Securities and Futures Commission (SFC) to launch ETFs (exchange-traded funds) tracking cryptocurrency futures.

While no application has been approved yet, sources have told Nikkei Asia that these companies have received regulatory feedback, with the SFC keen on focusing on investor protection. One source also noted that applications for ETF products would likely take up to three months to process.

The string of applications comes after the SFC announced in October that it could allow retail investors to trade ETFs linked to cryptocurrencies. Last month, the Hong Kong SAR Government set out its policy stance and approach towards developing a vibrant sector and ecosystem for virtual assets (VA) in Hong Kong in a post on its official blog, as the city moves towards legalizing crypto trading for retail investors and position itself as a hub for digital assets.

HK vs SG

Despite its strong stance against retail participation in the space, Singapore is generally viewed as more progressive to its Northern Asian rival when it comes to the digital assets sector. However, the city state is set to restrict retail participation even further.

The FTX debacle has also cast a spotlight on Singapore’s crypto ambitions, due to Temasek‘s (one of Singapore’s sovereign wealth fund) investment into FTX. The MAS (Monetary Authority of Singapore) recently announced that it will be introducing some basic investor protection measures for DPT service providers which are licensed in Singapore, and will seek the industry’s feedback before implementing the “appropriate regulatory measures”.

On the other hand, Hong Kong seems to be advancing its crypto regulations, and recently indicated that it will chart its own course that is distinct from the approach taken by Beijing.

Siu, the co-founder and executive chairman of Animoca Brands, told Bloomberg that “There is a clear demonstration that they [Hong Kong] has a different perspective from China, and reinforces the idea that while China and Hong Kong are one country, they are actually distinctly different in terms of the way they operate things. Even financially today, Hong Kong already has a different role than China, and the rest of the world doesn’t quite understand that. I think this policy finally makes that clear.”

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