TechFlow news — Hong Kong has introduced new rules for issuers of virtual asset futures ETFs. Yesterday, the Securities and Futures Commission (SFC) released a circular detailing requirements for authorizing virtual asset futures ETFs for public offering in Hong Kong: any product must meet the requirements applicable to unit trusts, mutual funds, and non-listed structured products. ETF issuers must demonstrate at least a three-year track record and a history of regulatory compliance. Issuers will also need to prove that their digital asset ETFs have sufficient liquidity.
The net derivatives exposure must not exceed 100% of the ETF's total net asset value. Issuers are required to conduct investor education initiatives prior to launching their products. On October 31, Julia Leung, SFC's Executive Director of Intermediaries Division and Deputy CEO, revealed during the Hong Kong FinTech Week that the SFC has been actively studying the establishment of a framework to authorize ETFs investing in mainstream virtual assets with proper investor protection measures.
"We now believe that certain initial concerns regarding virtual asset futures ETFs have become manageable and can be effectively addressed by implementing appropriate safeguards. In addition to existing ETF regulations, virtual asset futures ETFs will also need to comply with additional requirements concerning their management companies, investment strategies, disclosures, and investor education. At the initial stage, we expect the underlying assets to be limited to Bitcoin and Ethereum futures traded on the Chicago Mercantile Exchange (CME)." Source link
