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The backstory: Hong Kong wants to become a hub for digital assets and Web3 companies. If the concept of Web3 is unfamiliar, think of it as a new, decentralized internet powered by blockchain and similar tech. Despite challenges in the crypto world, Hong Kong is staying committed to its goal. For example, Finance Chief Paul Chan allocated HK$50 million (approximately US$6.4 million) to fast-track Web3 last year. Then, last June, Hong Kong rolled out rules for virtual assets, opening the door for retail investors to explore tokens like bitcoin and ether on licensed exchanges.
More recently: This month, US regulators approved spot exchange-traded funds (ETFs) tied to bitcoin, a big move for the roughly US$1.7 trillion digital asset sector. This brings cryptocurrencies closer to mainstream finance. Afterward, speculations were swirling that Hong Kong regulators, who expressed openness to reviewing spot crypto ETF applications in December, might take a cue from the US and follow suit.
The development: Right now, Hong Kong's financial scene is fully embracing crypto. Leading the charge is Venture Smart Financial (VSFG), which is gearing up to launch a bitcoin-focused ETF. Brian Chan, the Head of Investment and Product at VSFG, aims to manage US$500 million in assets by the end of the year. This follows the Securities and Futures Commission's (SFC) recent guidelines for approving spot crypto funds, and VSFG has said it’s all set to apply for a bitcoin ETF this quarter.
“It’s a market that has huge potential,” said Brian Chan, group head of investment and product at VSFG. “Our goal is US$500 million in assets under management by the end of this year.”
“We welcome proposals using innovative technology that boosts efficiency and customer experience,” said Securities and Futures Commission CEO Julia Leung last November. “We’re happy to give it a try as long as new risks are addressed. Our approach is consistent regardless of the asset.”
“The changing attitude of the Hong Kong SAR government towards crypto signals a nod from the Chinese central government granting pilot status to HK for some forward-looking experiments on how can crypto be best adopted and localized for the huge Chinese market at large," said Justin Sun, founder of Tron, last year. "I'm very bullish on the outlook for crypto in the greater China region for the next decade."