Hong Kong-listed fund manager Huobi Technology is planning to launch an exchange traded fund (ETF) that tracks popular cryptocurrencies. The firm, which is a subsidiary of popular crypto exchange Huobi Global, intends to target retail investors with the planned ETF.
Huobi has written to Hong Kong’s Securities and Futures Commission (SFC), and intends to structure the ETF such that is is accessible to retail investors whose total assets are less than HK$8 million (USD1 million).
The move would be the first pathway to crypto for retail investors in Hong Kong. Currently, crypto exchanges operating in the city are only allowed to service professional investors.
Huobi bets on friendlier crypto laws in Hong Kong
The fund manager is betting on an eventual easing of the professionals-only rule for investment in crypto, Hong Kong newspaper The South China Morning Post reported. It is also banking on receiving approval for the ETF by keeping all its trading and redemption solely in the city.
This is in the face of a proposed bill that seeks to ban retailers from directly trading Bitcoin and other cryptocurrencies- a move that would be devastating for crypto adoption in the city.
But the SFC recently also relaxed its professionals only stance on some ETFs, indicating that it may do so for certain crypto-linked products as well. The main goal of the SFC is to protect retail investors from market shocks and volatility- something the crypto market is quite prone to.
Huobi already offers several crypto-related products to professional investors. It is one of the only four fund managers authorized by the SFC to do so.
While several American and European markets already host crypto ETFs, options for retailers to invest in the space are somewhat limited in Asia. But friendlier laws in Hong Kong, a major financial hub, could change that notion.
ETFs are also an effective vehicle for attracting more investment into crypto, given that they allow investors to maintain exposure to the space without directly buying any digital assets.
Hong Kong losing its crypto sheen?
Once a haven for crypto startups, Hong Kong has since lost some of its appeal as a destination for crypto investment. The professionals only law, along with China’s crackdown on cryptocurrencies have somewhat clouded the outlook for the city’s crypto potential.
The government has also dragged its feet on passing comprehensive crypto regulation- a move that has resulted in several major players leaving the city.
FTX had shifted base from Hong Kong to the Bahamas, citing regulatory uncertainty. Crypto.com in 2021 also shifted its headquarters from Hong Kong to Singapore- which has been much more welcoming to crypto businesses.
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