April 18, 2024

A fund managing firm in Hong Kong, Huobi Tech, is on the verge of releasing a tracking exchange-traded fund (ETF) for crypto-related services targeting retail investors.

The move by Huobi Tech came after city authorities made public the new guidelines for transactions on digital assets; the new guidelines relaxed some of the rules overseeing the operation of foreign ETFs. And it is this relaxation that Huobi Tech is looking to leverage to drive its cryptocurrency tracking move.

For emphasis, Huobi Tech is an independent enterprise with no business, operational, or ownership connection with the widely known crypto exchange platform, Huobi Global.

According to Huobi Tech, it has previously submitted a request to the Securities and Futures Commission (SFC) regarding its ETF, which it plans to track $2 trillion worth of cryptocurrencies.

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In another positive development, Huobi Tech launched its over-the-counter (OTC) crypto trading desk during the first week of this month.

ETFs Adhering to New Regulations

Last month, the SFC and the Hong Kong Monetary Authority announced that retail investors are not permitted to access ETFs. The reason is that the decision was taken in the best interest of investors to shield them from the risks associated with virtual trading assets.

The new ETF plans to follow all necessary rules and regulations guiding investment in digital assets in the city, despite the earlier belief that exchange-traded funds involving cryptocurrency are prone to high risk. Only seasoned investors are allowed to trade ETFs, and this means that investors whose portfolios are less than a million dollars are not eligible to trade ETFs.

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However, the coming of the new guidelines and the move by Huobi Tech is an attempt to change the situation by creating an avenue for retail investors to get into ETF trading.

Huobi Tech Is Relying On Exceptions in New Guidelines

There is no way that the fund managers can sidestep the city authorities’ decision to limit ETF trading. Still, Huobi Tech appears to depend more on the recent relaxations on crypto ETF targeting retail investors.

Earlier in the year, the apex regulatory agency in Hong Kong issued a joint statement announcing the restriction placed on retail investors who are active in ETF trading via regulated exchanges in either the U.S. or U.K.

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The same circular also mentioned some categories of asset-based products and classified them into two, which are complex and non-complex.

Depending on the services provided by enterprises, their products may be classified under two broad categories, which are subject to meeting the critical factors outlined by the regulating bodies.

As for retail investors, non-complex products are where they are granted access. Other than this category, no retail investors are allowed to make any attempt at moving into the complex category without the express permission of the agency in charge.

Following the changes and subsequent relaxation of the regulations guiding investment in crypto ETFs, Huobi Tech aims to utilize the opportunity to get retail investors active in crypto ETFs.

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