- Huobi Technology has applied to the securities regulator in Hong Kong for an ETF that tracks the prices of popular cryptocurrencies despite limiting regulations.
- The firm is banking on the securities regulator easing a policy that delegates crypto products only to professional investors who invest at least $1 million.
The cryptocurrency ETF fever is rising beyond the U.S and Canada, and Huobi Technology wants to offer a similar product in Hong Kong. However, while the product is likely to be approved, there are other limiting laws that could curtail its growth.
Huobi Tech, which is publicly listed on the Stock Exchange of Hong Kong, recently filed an application with the Securities and Futures Commission. The ETF will track crypto prices, just as those approved in the U.S do, with the investors not having to purchase any physical BTC themselves.
The company is banking on the SFC relaxing its rules which delegate crypto products to professional investors, which in Hong Kong are those with more than HK$ 8 million ($1 million). Huobi Tech wants to avail the ETF to the retail traders, people familiar with the matter told the South China Morning Post.
Romeo Wang, the senior vice-president at Huobi Tech believes that the company has structured the ETF in a way that sufficiently protects investors. While declining to directly comment on the application, the executive stated:
Having all the trading and redemption done directly in Hong Kong … would give better protection to investors, as the fund will be regulated under Hong Kong law. We will keep close and positive communications with regulators including the SFC to obtain the proper licenses and approvals.
The law prohibiting retail investors from dabbling in crypto was introduced by the SFC and the Hong Kong Monetary Authority, which is the de facto central bank, in January. Claiming it was a measure for investor protection, it barred anyone whose investments are below $1 million from getting involved in crypto, a big blow to Bitcoin adoption in the city-state. This law is still going through the legislative process.
Currently, Huobi Tech is one of four firms that are authorized to offer crypto ETFs, but only to professional investors, with the other three being Axion Global Asset Management, Venture Smart Asia, and Fore Elite Capital Management.
With the influx in funds and investor interest in crypto, it’s only natural that investment firms are seeking to target retail investors, Chris Pigott, the head of Asia ETF services in Hong Kong at Brown Brothers Harriman, a US custodian believes.
He commented:
As more capital is allocated to virtual assets, fund managers in Hong Kong are trying to see what opportunities there are to offer products to investors. More innovative products in the form of ETFs is a natural next step.
Related: Bloomberg: Bitcoin ETF may be approved by the SEC in 2023
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