Hong Kong Places Regulation Rules On ETFs
Hongkong, China’s special administrative area, has specified the standards that all exchange-traded funds (ETFs) must meet before listing their crypto products in the city. This requirement is set to place Hong Kong in the centre of all virtual assets as it sees to the implementation of these regulations.
Basic Requirements Outlined
The Securities and Futures Commission (SFC) has reinstated crypto laws governing how ETFs list digital assets. They also intend to allow Bitcoin and Ether futures access to ETFs.
The SFC developed this regulatory strategy for virtual assets in November 2018. This method highlighted the hazards associated with trading in virtual assets and recommended that only professional investors trade in virtual assets.
Among the regulations listed, all crypto products must meet the unit trust and mutual fund requirements.
Furthermore, before listing a product, every ETF provider must have three years of experience/track record of regulatory compliance.
Issuers will also have to demonstrate that all virtual assets are available for product listing, and all virtual assets up for listing must have adequate liquidity, otherwise, they will not be evaluated.
The net derivative must be less than 100% of the ETF’s net value.
And before listing any crypto product, issuers of these virtual assets are required to conduct investor education.
More Details About This Regulation
According to an excerpt from the SFC’s speech on this regulation, it was made known that there had been significant progress in virtual assets, and that some of the most urgent worries concerning these Virtual assets Futures ETFs had grown overtime to be manageable with new developments. It is also worth mentioning that sufficient controls, disclosure, and investor education could adequately address these concerns.
However, despite this announcement, the SFC issued a caution to investors regarding cryptocurrency and virtual assets in general.
It was also stated that the fringe benefits of cryptocurrency on investing cannot outweigh the overall impact it has on investors when the markets begin to deteriorate. Investors should therefore take caution and conduct in-depth research before investing long or short-term.
This regulation is based on the belief that cryptocurrency can be regulated and that order can be maintained when listing crypto goods on ETFs.
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