Hong Kong outlines new rules for crypto futures ETF issuers

Quick Take

  • Only exchange-traded funds backed by bitcoin and ether futures traded on CME will be allowed.
  • ETF managers need to have at least a three-year track record.

Hong Kong's regulator has detailed the basic requirements that exchange-traded fund managers need to meet in order to list crypto products in the city.

The list forms part of a wider effort by city officials to re-establish Hong Kong as a center for virtual assets. The finance minister and other senior officials on Monday laid out plans to attract crypto-related companies including clearer trading rules.

Hong Kong's regional government also re-emphasized its participation in China's broader experiment with central bank digital currencies. 

Among those plans were crypto futures ETFs with underlying assets in instruments linked to bitcoin and ether futures traded on the Chicago Mercantile Exchange (CME), Securities and Futures Commission Deputy CEO Julia Leung announced at Hong Kong Fintech Week today.

A circular published after the forum closed for the day spelt out more details on what the SFC expected from any ETF issuer that sought regulatory approval to list a futures crypto product in Hong Kong. 


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  • Any product needs to meet requirements governing unit trusts, mutual funds and unlisted structured products.
  • The ETF issuer needs to show a minimum three-year track record and record of regulatory compliance.
  • Issuers will need to demonstrate digital asset ETFs have adequate liquidity.
  • Net derivative exposure cannot exceed 100% of the ETF's total net asset value.
  • Issuers are required to carry out investor education efforts before launch.

''It has been observed that there are meaningful developments in the VA ecosystem recently and some of the initial concerns over VA Futures ETFs have become increasingly manageable and could be adequately addressed with proper safeguards, disclosure and investor education,'' the SFC said in its regulatory notice.

But despite the announcement the agency raised caution about cryptocurrencies and other virtual assets. The SFC's announcement noted that, "a good part of the VA ecosystem (e.g., VA trading platforms) is still not subject to the same robust regulation as service providers or products in traditional financial markets, investment products that invest directly in spot VAs may continue to present investor protection issues.''


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About Author

Benjamin Robertson is senior newsletter writer at The Block, based in Oxford. He covers global crypto policy and regulation news. Before joining, he worked at Bloomberg News where he wrote about crypto, regulation and finance in Hong Kong, and later reported on private equity and asset management in London. Get in touch via email at [email protected] or on Twitter at @BMMRobertson