The Securities and Futures Commission hinted it might follow in the CME’s footsteps by solely initially allowing listings of ETFs linked to Bitcoin and Ether futures.
The Securities and Futures Commission of urban center has set up requirements for entities considering a public giving of an exchange-traded fund (ETF) tied to cryptocurrency futures.
In an Oct. 31 circular, the SFC said that additionally to antecedently obligatory necessities on unit trusts and mutual funds for authorization of a crypto futures ETF, management firms in urban center would want to “have an honest record of restrictive compliance” still as 3 years of expertise managing ETFs, considerately for similar investment vehicles. The monetary regulator hinted it'd follow within the Chicago Mercantile Exchange’s footsteps by solely ab initio permitting listings of ETFs connected to Bitcoin.
“Only [virtual quality, or VA,] futures listed on typical 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 also the roll prices of the relevant VA futures contracts are manageable and the way such roll prices are managed,” same the SFC.
The financial regulator added that the net derivative exposure of any crypto futures ETF “shall not exceed 100 percent of the ETF’s total net asset value,” and companies ought to expect to adopt a lively investment strategy to account for incidents together with market disruptions.
The SFC conjointly said ETF issuers were to “carry out intensive capitalist education” before the launch of any crypto investment vehicle in metropolis. The SFC circular came as a part of a policy update from Hong Kong’s government, that proclaimed on Oct. 31 that it had been “ready to engage” with international crypto exchanges on regulative problems. the govt aforesaid it planned to launch variety of pilot comes, together with those geared toward nonfungible tokens, green bond tokenization, and a digital Hong Kong dollar.
Christopher Hui, Hong Kong’s secretary for money services and the reasury, said:
“We recognize the potential of DLT and Web 3.0 to become the future of finance and commerce, and under proper regulation they are expected to enhance efficiency and transparency. The Government is prepared to embrace this future, and we welcome the clustering of Fintech and VA community and talents in Hong Kong, and we will promote the sustainable development of financial services across the whole VA value chain.”
( Turner Wright, Cointelegraph, 2022 )