Huobi Technology, a Hong Kong-listed fund manager, is proposing to introduce an exchange-traded fund (ETF) that will follow prominent cryptocurrencies. The firm, which is a subsidiary of famous cryptocurrency exchange Huobi Global, plans to market the proposed ETF to individual investors.
Huobi has written to Hong Kong’s Securities and Futures Commission (SFC) indicating that it aims to structure the ETF in such a way that it will be accessible to retail investors with less than HK$8 million in total assets (USD1 million).
This would be Hong Kong’s first path to crypto for regular investors. At the moment, the city’s crypto exchanges are only permitted to serve professional investors.
Huobi is betting on Hong Kong’s crypto-friendly legislation.
According to Hong Kong tabloid The South China Morning Post, the fund manager is counting on an eventual relaxation of the professionals-only regulation for cryptocurrency investment. Additionally, it is betting on ETF approval by reserving all trading and redemption for the city.
This is in opposition to a proposed bill that would prohibit merchants from directly trading Bitcoin and other cryptocurrencies – a move that would have a devastating effect on the city’s crypto uptake.
However, the SFC recently changed its professionals-only stance on certain ETFs, implying that it may do the same for certain crypto-related products. The SFC’s primary objective is to safeguard retail investors against market shocks and volatility, which the crypto market is notorious for.
Huobi already provides professional investors with a variety of cryptocurrency-related products. It is one of the SFC’s four authorised fund managers.
While numerous markets in the United States and Europe currently have crypto ETFs, retail investment opportunities in the field are fairly limited in Asia. However, more hospitable policies in Hong Kong, a key financial centre, may alter that perception.
ETFs are also an efficient way to increase investment in crypto, as they enable investors to keep exposure to the industry without purchasing any digital assets directly.
Is Hong Kong losing its lustre as a crypto hub?
Hong Kong, once a sanctuary for crypto companies, has subsequently lost some of its allure as a crypto investment destination. The city’s crypto promise has been somewhat dimmed by the city’s professionals-only ordinance and China’s ban on cryptocurrency.
Additionally, the government has dragged its heels on enacting comprehensive crypto legislation, which has led in the departure of some significant businesses from the city.
FTX had relocated to the Bahamas from Hong Kong, citing regulatory uncertainties. Crypto.com also relocated its headquarters from Hong Kong to Singapore in 2021, a country that has been far more receptive to cryptocurrency firms.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
