Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Crypto ETFs are exchange-traded funds that track the performance of one or more cryptocurrencies, such as Bitcoin and Ether. Crypto ETFs allow investors to gain exposure to the crypto market without having to buy, store, or manage the underlying assets themselves. Crypto ETFs can also offer more liquidity, transparency, and diversification than direct crypto investments.

There is a lot of hype about crypto ETFs in the West, especially in the US, where many fund managers have been applying for the approval of the Securities and Exchange Commission (SEC) to launch spot crypto ETFs, which would hold the actual cryptocurrencies in custody. However, the SEC has been reluctant to approve these ETFs, citing concerns over market manipulation, investor protection, and regulatory compliance. So far, the SEC has only approved crypto ETFs that invest in Bitcoin futures contracts, which are derivatives that track the price of Bitcoin but do not involve the physical delivery of the asset.

The approval of spot crypto ETFs in the US would be a major milestone for the crypto industry, as it would open the door for more mainstream adoption and institutional participation. It would also create more competition and innovation in the crypto space, as well as more regulatory clarity and oversight. Many crypto enthusiasts and investors are eagerly awaiting the SEC’s decision, which could have a significant impact on the crypto market sentiment and price movements.

Hong Kong, one of the world’s top financial hubs, is thinking about allowing spot crypto ETFs, which would make it the first major place in Asia to do so, and possibly make it a regional center for digital asset activities. According to a recent report by Bloomberg, the Hong Kong Securities and Futures Commission (SFC) is in talks with potential issuers of crypto ETFs and is considering whether to grant them licenses under its existing framework.

What are spot crypto ETFs and why do they matter?

An ETF is a kind of fund that follows the performance of an asset or a group of assets, and can be traded on a stock exchange like a normal stock. A spot crypto ETF is an ETF that directly invests in cryptocurrencies, such as Bitcoin or Ether, and shows their spot prices, which are the current market prices of the tokens. A spot crypto ETF would let investors get exposure to the crypto market without having to buy, store, or manage the tokens themselves, which can be hard, expensive, and risky. A spot crypto ETF would also give more liquidity, transparency, and diversification than buying individual tokens, and would be under the regulatory control and investor protection of the stock exchange and the securities regulator.

Spot crypto ETFs are seen as a way of making cryptocurrencies more popular and accessible to a bigger range of investors, especially institutional and retail investors who may be hesitant or unable to invest in the crypto market directly. Spot crypto ETFs could also increase the demand and adoption of cryptocurrencies, and improve their legitimacy and credibility as an alternative asset class. Moreover, spot crypto ETFs could improve the innovation and competitiveness of the financial sector, and attract more talent and capital to the crypto ecosystem.

Challenges and risks of spot crypto ETFs

However, spot crypto ETFs also have challenges and risks, as the crypto market is still mostly unregulated, unpredictable, and vulnerable to various threats. Some of the main challenges and risks are:

Regulatory uncertainty: The crypto market is subject to different and often conflicting regulations across different places, and some countries have banned or limited the use of cryptocurrencies altogether. This creates legal and compliance challenges for spot crypto ETFs, as they may have to deal with multiple and changing regulatory regimes, and face possible sanctions or restrictions from some authorities. Moreover, the crypto market is constantly changing and innovating, and new kinds of tokens and platforms emerge often, which may pose new regulatory issues and challenges that are not yet covered or solved by the existing frameworks.

Market volatility: The crypto market is very volatile, as the prices of cryptocurrencies can change a lot and unexpectedly due to various factors, such as supply and demand, market mood, news and events, technical issues, and speculation. This makes the crypto market very risky and speculative, and exposes spot crypto ETFs to big price changes and potential losses. For example, Bitcoin, the biggest and most famous cryptocurrency, reached a record high of over $67,567 in November 2021, but recently it went below $20,000 in early 2023, losing more than half of its value. Such extreme volatility can hurt the confidence and trust of investors, and stop them from investing in spot crypto ETFs.

Security and operational risks: The crypto market is also exposed to various security and operational risks, such as hacking, fraud, theft, cyberattacks, human mistakes, technical problems, and system failures. These risks can affect the integrity and functionality of the crypto platforms, wallets, and transactions, and result in the loss or theft of cryptocurrencies or user data. For instance, in 2023, the JPEX crypto exchange in Hong Kong was allegedly involved in a HK$1.6 billion ($204 million) fraud that affected more than 2,600 investors, who lost their money and personal information. Such incidents can harm the reputation and credibility of the crypto market, and expose spot crypto ETFs to legal and financial responsibilities.

Hong Kong’s position on spot crypto ETFs

Hong Kong is currently one of the few places in the world that allows futures-based crypto ETFs, which are ETFs that invest in contracts that bet on the future prices of cryptocurrencies, rather than the tokens themselves. However, the demand and performance of these ETFs have been low, as they are more complex and costly than spot crypto ETFs, and may not show the actual prices of the tokens. As of November 2023, there are only three futures-based crypto ETFs listed on the Hong Kong Stock Exchange (HKEX), with a combined market value of about $65 million.

In contrast, Hong Kong does not allow spot crypto ETFs, as the Securities and Futures Commission (SFC), the city’s securities regulator, has not authorized any such products for public offering. However, this may change soon, as the SFC’s new chief executive officer, Julia Leung, said in an interview with Bloomberg on November 5, 2023, that the SFC is considering allowing spot crypto ETFs, as long as they meet the regulatory requirements and address the new risks. Leung said that the SFC is open to proposals that use innovative technology to boost efficiency and customer experience, and that the SFC is happy to give it a try as long as the risks are managed.

Leung’s statement shows that Hong Kong is taking a more active and progressive approach to the crypto market, and is trying to create an ecosystem for digital assets that can attract more investors and businesses. This is consistent with Hong Kong’s recent efforts to establish a complete and strong regulatory framework for virtual assets, which covers crypto exchanges, stablecoins, and tokenization. The SFC launched the framework in June 2023, with the goal of improving the transparency, accountability, and security of the crypto market, while promoting its innovation and development.

Two sides of the coin

As a practitioner who has been following the crypto market for several years, I have a mixed and complex view on Hong Kong’s plans to greenlight spot crypto ETFs. On one hand, I think that this is a smart and forward-looking move that could make Hong Kong a leading and competitive digital asset center in Asia, and maybe the world. Spot crypto ETFs bring benefits and opportunities for the financial sector, the crypto ecosystem, and the investors, as they could provide more access, convenience, diversity, and innovation to the crypto market, and enhance its growth and adoption. I also think that Hong Kong has the potential and the ability to become a successful and reputable spot crypto ETF market, as it has a strong and mature financial infrastructure, a sophisticated and experienced regulatory system, and a lively and dynamic crypto community.

On the other hand, this is a risky and difficult move that could expose Hong Kong to a lot of uncertainties and threats, as the crypto market is still mostly unregulated, unstable, and insecure. Spot crypto ETFs present challenges and risks for regulators, issuers, and investors, as they could face legal and compliance difficulties, market volatility and losses, and security and operational breaches. Hong Kong has to be careful and sensible in its authorization and supervision of spot crypto ETFs, as it has to balance the interests and expectations of different stakeholders, and ensure the protection and education of the investors, especially the retail investors who may not be fully aware or informed of the risks and complexities of the crypto market.

Many of my friends think that Hong Kong’s plans to greenlight spot crypto ETFs are a double-edged sword that could bring both rewards and risks, and that Hong Kong has to consider the advantages and disadvantages carefully and responsibly, and adopt a balanced and adaptive approach that can foster the innovation and development of the crypto market, while reducing its challenges and risks.

But in my personal opinion, Hong Kong’s potential approval of spot crypto ETFs is a good decision, as it would benefit both the investors and the industry in the long run. The advantages outweigh the disadvantages, as the risks and challenges can be mitigated by proper regulation, education, and innovation.

The next steps in policy and industry practice should focus on creating a robust and adaptive regulatory framework for spot crypto ETFs in Hong Kong. It’s essential to strike a balance between fostering innovation and safeguarding investors, particularly the retail sector. This regulatory framework should address challenges related to regulatory uncertainty, market volatility, and security risks, promoting transparency and accountability. It should provide comprehensive investor education to ensure a better-informed market. In light of the Western enthusiasm for crypto ETFs, Hong Kong’s success in this endeavor could set a benchmark for other Asian countries, facilitating broader adoption and promoting responsible growth in the crypto space.

Hong Kong has the potential to become a leader and a model in the crypto space, as it has a strong and mature financial system, a supportive and proactive government, and a vibrant and diverse crypto community. Hong Kong’s move could also influence and inspire other Asian countries and regions to follow suit and embrace the crypto revolution.

 

 

Source: https://www.blockhead.co/2023/11/14/hong-kongs-plan-to-greenlight-spot-crypto-etfs-smart-move-or-foolish-gamble-gs-plans-to-greenlight-spot-crypto-etfs-a-smart-move-or-a-foolish-gamble/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Bitcoin Spikes Above $21,000: Is The Move Sustainable Or Just Speculative Mania?

Bitcoin Spikes Above $21,000: Is The Move Sustainable Or Just Speculative Mania?
ZINGER KEY POINTS
  • Major cryptocurrencies see gains, market capitalization surpasses $1 trillion.
  • Bitcoin has crossed $20,000, having experienced 11 consecutive days of upward movement.

The largest cryptocurrency by market capitalization, Bitcoin has spiked above the psychologically important barrier of the $21,000 mark. Saturday’s move brought cheer to the subdued markets, which have been rattled by the collapse of several high-profile companies, including cryptocurrency exchange FTX.

The rally in prices of major cryptocurrencies like Polygon and Solana and memecoins like Dogecoin and Shiba Inu, is fuelled by optimism that digital currencies may have bottomed.

This is the first time since Nov. 8, 2022, that Bitcoin has crossed $20,000, having experienced 11 consecutive days of upward movement.

Other notable cryptocurrencies such as Ethereum and Cardano also saw substantial gains, pushing the total market capitalization of the cryptocurrency market over the $1 trillion mark for the first time since November.

The current spike in Bitcoin’s value comes after the Labor Department issued data showing that top-line inflation rose by 6.5% in December, down from 7.1% in November.

On Thursday, Federal Reserve policymakers expressed relief that the inflation rate continued to decrease in December.

Bear Market Not Over

Anndy Lian, Chief Digital Advisor, of Mongolian Productivity Organization tells Benzinga says investors should take a cautionary stance and not become too bullish on the digital currency.

“This does not mean that the bear market is over. Firstly, the lack of Bitcoin trading volume around the region of $18,000 and RSI shows that bitcoin is over-bought, showing that the rally could be short-lived.  Secondly, the massive layoffs by the crypto companies and the SEC’s new charges on Genesis and Gemini for the Unregistered Offer and Sale of Crypto Asset Securities looks like it would take a longer time to see a real sustainable bull run,” he says.

He added that Bitcoin and other cryptocurrencies tend to respond more quickly to macroeconomic changes and shifts than stocks do and that we may be currently witnessing such a shift.

“I do see more investors putting more capital over the week. Overall, this is still a positive sign for the market,” he adds.

Mainstream Adoption Will Lead To More Stability

According to Scott Tripp, a member of redecentralise.com, a not-for-profit organization, the increasing mainstream acceptance and institutional adoption of Bitcoin will lead to more stability in its price over time, the current rally is driven by speculative mania and may not be sustainable in the long run.

Bitcoin May Shoot Up Further Over 2024

Raj A Kapoor, the founder of India Blockchain Alliance, predicts that 2024 could be the year when Bitcoin experiences a significant price increase due to the halving event.

According to Kapoor, this event could be responsible for the current positive sentiment and upward trend in Bitcoin’s value.

“I also feel that large investors or Bitcoin Whales have resumed their Bitcoin holdings. The large Bitcoin whales are keeping between 1,000 and 10,000 BTC in their wallets, according to data from Santimen clearly indicating that investors have been stocking up on Bitcoin, which may be a hint of a recovery in the price of Bitcoin,” Kapoor adds.

 

Photo: courtesy of Shutterstock.

Source: https://www.benzinga.com/markets/cryptocurrency/23/01/30420995/bitcoins-spikes-above-21-000-is-the-move-sustainable-or-just-speculative-mania

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Anndy Lian Spoke at Crypto Art NFT/ DeFi Event “NFT has to move beyond art, into finance”

Anndy Lian Spoke at Crypto Art NFT/ DeFi Event “NFT has to move beyond art, into finance”

Anndy Lian and TokyoCrypto catch up at the Crypto Art NFT Event on Twitch, 10 April 2021. This event is produced by NFT.Black and partnering with Beyond Finance.

NFT stands for non-fungible token, are pieces of digital content linked to the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and ethereum. Unlike NFTs, those assets are fungible, meaning they can be replaced or exchanged with another identical one of the same value, much like a dollar bill.NFTs aren’t exactly new. CryptoKitties, a digital trading game on the cryptocurrency platform Ethereum, was one of the original NFTs, allowing people to purchase and sell virtual cats that were both unique and stored on the blockchain.

NFT catches the trend this quarter and is the most talked-about topic currently in the crypto-verse. It’s popularity is in part driven by the fact that anybody can tokenise their work to sell as an NFT but interest has been fuelled by recent headlines of multi-million-dollar sales. On 19 February, an animated Gif of Nyan Cat – a 2011 meme of a flying pop-tart cat – sold for more than $500,000. A few weeks later, musician Grimes sold some of her digital art for more than $6m.

It is not just art that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the first-ever tweet, with bids hitting $2.5m. Christie’s sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art.

Anndy Lian was also interviewed by Channel News Asia (CNA) Insider last week. (https://anndy.com/interview/is-digital-art-the-next-thing-to-invest-in-money-mind-cna-insider-nft-boom/)

In the event, Anndy shares his views on crypto in general. TokyoCrypto also asked Anndy about NFT, DeFi, on-chain custodian and more.

At the end of the event, Anndy brought up an interesting point. “Combine cross-chain capabilities from tech companies like CZZ (Classzz.com) with NFT multi-chain marketplace like Hodooi.com would be interesting. Companies should come together to create a better-decentralised environment for this industry and not work alone.”

Lian has also told a reporter from Blockpaths.com that NFT has to move beyond art, into finance. “NFT is not just about art. It is also way beyond the current hype. The real capability for NFT is not fully tapped on. Its ecosystem and infrastructure are still in the building stage, we will definitely see its true self in the near future.”

You can view the full interview at:

About Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial blockchain entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030” and currently the Advisory Board Member of Hyundai DAC Technology. He plays a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region. Anndy is also part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce.

An avid supporter of incubating start-ups, Anndy has investments in several traditional companies. He has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

You can read more about Anndy’s work at www.anndy.com

About Blockpaths.com

Blockpaths.com is a social media marketing company that paves the path for the future by sharing knowledge on blockchain technology and cryptocurrencies. We want to tell the world what blockchain and cryptocurrency can do for us now and in the future. On our platform, we bring you the most credible news and information that is happening in the industry. We also want to showcase the best companies and personalities that will give you the true definition of what this industry is all about.

On top of this, we are also a social media marketing company.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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