Hong Kong's government issued a policy statement on virtual assets today (31 October), stating that the Securities and Futures Commission would be conducting a public consultations on how retail investors may be given access to virtual assets, as well as the possibility of having crypto ETFs on the market.
The government's statement added it "is open to future review on property rights for tokenised assets and the legality of smart contracts," standing in sharp contrast to mainland China's ban on all crypto activity last year.
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Current regulatory restrictions limit cryptocurrency trades to institutional investors with a portfolio of at least HK$8m (£886,000).
"The SFC has been actively looking to set up a regime to authorise ETFs which provide exposure to mainstream virtual assets with appropriate investment guardrails," said Julia Leung, Securities and Futures Commission (SFC) deputy CEO.
She added that crypto futures ETFs would be confined to just Bitcoin and Ethereum futures trading on the Chicago Mercantile Exchange.
Leung also said that there would be changes to how the SFC views tokenised securities, stating that they should now be treated in a similar way to existing financial instruments, and no longer classified as complex products.
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The government's statement said that it is exploring a number of pilot projects to test virtual assets, such as green bond tokenisation and a central bank digital currency, called ‘e-HKD'.
The region's government is currently reviewing Hong Kong's Virtual Asset Service Provider (VASP) licencing regime, which is set to come into effect 1 March next year.