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Hong Kong Finance Secretary Highlights Flexibility for the City’s 6 Spot Crypto ETFs

Hassan Shittu
Last updated: | 3 min read
Hong Kong Finance Secretary Highlights Flexibility for the City's 6 Spot Crypto ETFs

Hong Kong’s finance secretary, Christopher Hui, highlighted the flexibility offered by the in-kind subscription and redemption feature of the city’s six spot crypto exchange-traded funds (ETFs) as part of Hong Kong’s ongoing effort to establish itself as a regional cryptocurrency hub.

This innovation gives investors greater flexibility when subscribing to and redeeming units of these ETFs.

During his recent European visits, Hui promoted Hong Kong’s Web3 policies and the city’s unique financial advantages. He emphasized that the government has implemented comprehensive regulations for crypto and tokenization, showcasing Hong Kong’s readiness to embrace the evolving digital asset landscape.

These developments align with global trends toward efficient, low-cost payment solutions and sustainable economic transformation through green finance.

Hong Kong’s 6 Spot Crypto ETFs

Hui stated that the in-kind subscription and redemption feature of the city’s six spot crypto exchange-traded funds offers investors more flexibility as Hong Kong continues its drive to become a regional cryptocurrency hub.

Hui promoted Hong Kong’s web3 policies during his visits to several European forums last week, adding that the government has implemented a series of regulations for crypto and tokenization. Hui said,

“In terms of product innovation, the first batch of six virtual asset spot ETFs in Asia were listed in Hong Kong in April. Notably, Hong Kong pioneered an in-kind redemption mechanism that offers investors greater flexibility when subscribing to and redeeming units of virtual asset ETFs.”

However, the performance of the spot crypto ETFs in Hong Kong seems to pale compared to that of their U.S. counterparts.

According to data from The Block, the three Hong Kong spot bitcoin ETFs recorded a total daily trading volume of $6.67 million on Tuesday after logging $2.35 million on Friday and $6.08 million on Thursday. Monday was a public holiday in Hong Kong. By comparison, the 11 spot bitcoin ETFs in the U.S. saw $1.1 billion in total trading volume on Monday, following Friday’s $2.51 billion.

Hui also noted that the government issued the second batch of multi-currency tokenized bonds earlier this year, totaling $770 million, “representing the world’s first digitally native multi-currency government green bonds.”

During his visits to the Netherlands, Spain, and Portugal, Hui emphasized Hong Kong’s strategic advantages under the “one country, two systems” framework.

This includes free capital flow, a business-friendly environment, a simple and competitive tax system, and a diverse talent pool. He encouraged European businesses to use Hong Kong as a gateway to the Asian market, particularly the Greater Bay Area, which boasts over 86 million affluent consumers.

Hong Kong Gradually Becoming A Crypto Hub

The Hong Kong Financial Secretary also highlighted the success of Hong Kong’s startup ecosystem, which has seen significant growth. As of last year, nearly 4,300 startups employed over 16,000 people. This vibrant ecosystem, Hong Kong’s strategic location, and regulatory initiatives position the city as a leading financial and technological innovation hub.

In his discussions with European regulators and financial industry leaders, Hui outlined Hong Kong’s regulatory approach to virtual assets. This includes the introduction of a licensing regime for virtual asset trading platforms and the development of regulations for stablecoin issuers and over-the-counter trading services.

These measures aim to establish a comprehensive regulatory framework covering all key aspects of the virtual asset industry.

Furthermore, Hui invited relevant officials and regulatory leaders to attend Hong Kong’s flagship event, the Hong Kong FinTech Week, in October. This event, hosted by the Financial Services and the Treasury Bureau, will provide an opportunity for further international collaboration and exchange with key stakeholders in the fintech industry.

The recent Bitcoin Asia 2024 conference in Hong Kong drew significant interest, particularly from mainland Chinese investors. According to the South China Morning Post, about half of the 5,500 attendees were from China.

The event, organized by Bitcoin Magazine, focused on Asia’s evolving cryptocurrency investment landscape and highlighted the new spot Bitcoin exchange-traded funds (ETFs) launched by the Hong Kong Exchange (HKEX) on April 30.

These ETFs, the first in Asia, symbolize Hong Kong’s strategic push into the crypto market.