Hong Kong prepares stablecoin regulation, accepts first Bitcoin ETF application from Harvest Fund

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Hong Kong is set to accelerate crypto market infrastructure by 2024, with the launch and implementation of both Bitcoin Exchange Traded Funds (ETFs) and stablecoin regulations. China-based asset manager Harvest Fund (HFM) has filed a spot Bitcoin ETF with the Hong Kong Securities and Futures Commission. Report Published today from Tencent News.

Details about the Harvest Fund Bitcoin ETF are currently scarce, but it has been confirmed to launch on or after the Lunar New Year holiday on February 10. The report suggests that Hong Kong's regulatory body may approve multiple spot bitcoin ETF applications, similar to the US SEC's approach, to provide fairer market access. Although the Harvest Fund applied first, other regional financial institutions also expressed interest in launching spot bitcoin ETF products in Hong Kong later this year.

The move comes after Livio Weng, chief executive officer of crypto exchange HashKey, recently revealed that around a dozen asset management firms have started developing crypto ETFs for the Hong Kong spot in applications sent to the Hong Kong Securities Regulatory Commission. A Report Last week from Bloomberg, Venture Smart Financial Holdings (VSFG) revealed that it will launch its Bitcoin ETF position in Q1 this year.

The push for dot crypto ETFs follows growing interest in stablecoins. Bloomberg reports that several Hong Kong companies, including Harvest Global Investments, RD Technologies and VSFG, are in discussions with the Hong Kong Monetary Authority (HKMA) about possible stablecoin trials.

The trials will assess use cases ahead of Hong Kong's upcoming stablecoin laws. A December consultation paper outlined the HKMA's licensing requirements for fiat-pegged stablecoins, positioning it as an interface between traditional finance and crypto markets.

“We are asking to be included in the sandbox with our consortium partners to demonstrate the potential of programmable digital currency while meeting prudential requirements,” said Sean Lee, Senior Advisor and Head of Stablecoin at VSFG.

An HKMA spokesperson confirmed that arrangements are being made to launch a stable coin sanding arrangement soon, as long as the applicants demonstrate a “reasonable plan to issue FRS in Hong Kong”. FRS here refers to a “fiat-reference stablecoin”, a type of stablecoin pegged to the value of a fiat currency such as the US dollar or euro and backed by a government-issued currency.

Fiat-backed stablecoins are the most popular form of Statcoin and are digital assets backed 1:1 by a reference asset held by a third-party controlled financial entity. They can be traded in and returned from the issuer.

According to Eddie Yu, the CEO of HKMA, in 2010 A stable coin “It can be an interaction between traditional finance and the virtual property market.”

The parallel development of spot crypto ETFs and stablecoin regulations underscores Hong Kong's efforts to enable digital assets while ensuring investor protection through proper market regulation. It can expand access to crypto ETFs, and stable coin experiments will allow for controlled experimentation by providing gateways between traditional finance and emerging crypto sectors.

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