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This Banking Giant Files For Bitcoin ETF Application In Hong Kong

Following the recent approval of spot Bitcoin ETF (Exchange-Traded Funds) in the US and guidelines from Hong Kong’s Securities and Futures Commission (SFC) published in December of 2023, there has been increasing speculation about the launch of a spot Bitcoin ETF in Hong Kong this year. In a recent development, the first spot Bitcoin ETF application has been filed to the SFC for approval.

Chinese Financial Giant Takes The Lead

Earlier this month, Venture Smart Financial Holdings Ltd. (VSFG) expressed its plans to apply for a spot Bitcoin ETF with the SFC to be launched this quarter. Similarly, asset management firms like Samsung Asset Management have shown their interest in exploring the possibility in the future.

 A report from Tencent News revealed that Harvest Fund Management sent the first-ever spot Bitcoin ETF application in Hong Kong to the SFC on January 26, with the possibility of approval coming after the Lunar New Year at the earliest.

According to the news site, Hong Kong’s SFC wants to accelerate the approval of the first ETF after the US Securities and Exchange Commission (SEC) authorized the listing of the spot crypto products this month. The regulator’s plan includes listing the first ETF on the Hong Kong Stock Exchange after the Spring Festival.

Additionally, the report highlights the possibility of the SFC taking the same route as the US SEC and approving all applications simultaneously.

How Will Hong Kong’s Spot ETFs Compare To The US?

Regarding the performance of the investment products after the approval, a Hong Kong fund professional told Tencent News that “judging from the performance of the U.S. Bitcoin spot ETF, even if the Hong Kong Securities and Futures Commission approves multiple institutions at once, it may end up performing about the same as the U.S. market.”

However, some family office investor managers in Hong Kong suggested to the news site that “there may be some gap between the scale of Hong Kong spot ETF subscriptions and the United States.” The investor managers added that there’s real interest in subscribing to spot ETFs in Hong Kong, opposite to the “complexity of investment categories and operations” that stopped them from investing in the Bitcoin market before.

Moreover, the news sites reported that “compared with spot ETFs in the United States, in addition to accepting legal currency subscriptions, Hong Kong’s spot ETFs may also increase the possibility of direct Bitcoin subscriptions.”

Despite the interest and plans previously suggested by other investment and asset management firms, no organization has applied for a Spot Bitcoin ETF yet. Harvest Fund Management and the SFC haven’t issued further comment.

BTC, BTCUSDT, BTC ETF, Bitcoin ETF

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Hashkey Enables AVAX Trading For Hong Kong Users – But There’s A Catch

Hong Kong-based cryptocurrency exchange Hashkey will now support trading the Avalanche (AVAX) token on its platform. However, traders must meet an interesting requirement before interacting with this cryptocurrency on the exchange.

Traders Must Meet $1 Million Portfolio Requirement: SFC

On Wednesday, September 27, Hashkey announced the listing of the AVAX token on its platform, with trading expected to commence on Thursday, September 28. However, only professional investors or individuals with an investment portfolio worth at least 8 million Hong Kong dollars (equivalent to $1 million), according to Hong Kong’s Securities & Futures Commission (SFC).

Bitcoin (BTC), Ether (ETH), and Tether (USDT) are the only cryptocurrencies approved by the SFC for retail trading as of this writing. Meanwhile, other altcoins like AVAX are restricted to professional investors or individuals with a $1 million portfolio.

Since Hong Kong authorized retail crypto trading in August, the Securities & Futures Commission has placed significant restrictions on the operations of exchanges, including Hashkey. For instance, SFC requires users to deposit at least 10,000 Hong Kong dollars (or $1,500) during the Know Your Customer (KYC) verification process.

According to CoinGecko data, Hashkey, the first to receive a retail crypto license in Hong Kong, has a daily trading volume of roughly $4.93 million, which pales compared to its global counterparts. For context, Binance, the world’s largest crypto exchange, boasts a 24-hour trading volume of nearly $4.9 billion.

AVAX Price Continues Decline In September

Although the listing of AVAX on the Hashkey exchange poses a potential opportunity for increased adoption, it is worth noting that the cryptocurrency’s price has been struggling in recent months. And September wasn’t different for AVAX, as the token lost nearly 14% of its value in the past 30 days.

This continuous decline underscores Avalanche’s overall performance in 2023, which reflects the uncertain condition of the general market. The cryptocurrency has been on an estimated 58% plunge since notching a high of $21 in April.

According to data from CoinGecko, the Avalanche token changed hands for $8.91, with a 0.31% dip in the last 24 hours. As of this writing, the cryptocurrency has a daily trading volume of $117,251,082, reflecting an 18.4% rise in the past day. Avalanche ranks as the 24th-largest cryptocurrency, with a market cap of over $3.1 billion.

AVAX

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Beware Of Crypto Firms Falsely Claiming To Have Submitted License Applications

In recent developments, Hong Kong regulators have issued cautionary warnings to crypto investors, asking them to be careful of potential investment risks. According to the city’s chief regulatory agency, some cryptocurrency trading platforms have been making erroneous claims about meeting the regulatory requirements for digital assets. 

Investors Beware Of False Claims From Crypto Firms

The Securities and Futures Commission (SFC), the chief regulatory body of Hong Kong, released the alert on August 7. In the statement, the commission noted that some unlicensed exchanges in the city were engaging in “improper practices.” 

According to the body, unlicensed Virtual Assets Trading Platforms (VATPs) are falsely claiming to have submitted license applications to the body, which would enable them to conduct transactions legally in the special administrative region of China. 

Such fraudulent claims were designed to “give the public a false sense of assurance” and were targeted at “inducing another person to trade in virtual assets.” Making such claims amounts to a punishable offense under the city’s Anti-Money Laundering and Counter-Terrorist Finance Ordinance, the regulatory body said. 

Furthermore, the SFC will consider any likely misrepresentation made by an unlicensed Virtual Asset Trading Platform when deciding whether or not to grant them a license. The SFC may view as unfavorable any non-compliant actions that would need the reversion of client withdrawal or transactions that could have been reasonably avoided. 

The Securities and Futures Commission said it will evaluate a Virtual Asset Trading Platform’s application based on its ability to show genuine intention to correct previous non-compliant actions, including the gradual unwinding of impermissible transactions. 

Virtual Assets Trading Platforms that do not meet the agency’s requirements must make efforts to meet the regulatory and legal obligations of licensed VAPTs, the SFC clarified.

Crypto total market cap chart from Tradingview.com

Hong Kong’s Regulatory Framework

Hong Kong’s Securities and Futures Commission (SFC)  recently released guidelines for Virtual Asset Trading Platform operators in the country to provide more regulatory certainty for the crypto industry in the country and help protect investors’ interests. 

The SFC laid down rules that would enable centralized exchanges to provide services to retail clients, provided they are authorized by a license obtained from the Securities and Futures Commission. 

Under Hong Kong’s VASP regime, which kickstarted on June 1, 2023, a one-year grace period commencing from June 1, 2023, allowed exchanges with an existing large presence in the city to continue operations while making changes to their businesses to ensure compliance with the new SFCs rules. 

Platform operators that had not commenced operations before June 1, 2023, had to be SFC-licensed before they could operate. However, it seems that certain exchanges are already violating the rules provided under the new regime. 

According to SFC, investors participating in trading on unregulated virtual asset exchanges are likely to face “losing their entire investment” on the exchange if it “ceases operation, collapses, is hacked,” or “suffers from any misappropriation of assets.” 

Following this, many exchanges have publicly pledged to submit licensing applications with the SFC, including Huobi and OKX, two popular exchanges in Asia.