HSBC has reportedly made a groundbreaking move by offering its customers the ability to purchase and sell Bitcoin and Ethereum ETFs on the Hong Kong exchange, marking a significant milestone in the industry.
This development not only provides a new avenue for retail and institutional investors to access cryptocurrencies but also highlights the growing acceptance and integration of digital assets within regulatory frameworks.
The introduction of Bitcoin and Ethereum ETFs by HSBC is expected to pave the way for broader participation and investment opportunities in the crypto market, driven by their established reputation and credibility.
Bowing to pressure?
The recent announcement by HSBC to offer bitcoin and ethereum ETFs to its customers comes in the wake of growing pressure from the government on banks to accommodate crypto-related services. Just a week prior, there were reports indicating the mounting expectations on banks to serve customers interested in cryptocurrencies, with HSBC and Standard Chartered being specifically mentioned by the Financial Times.
The news was a swift follow up to a letter drafted on 27 April 2023 by the Hong Kong Monetary Authority (HKMA). In the letter, the HKMA mentioned the importance of supporting virtual asset service providers (VASPs) licensed and regulated by the Securities and Futures Commission (SFC) on their legitimate need for bank accounts in Hong Kong.
It also encouraged authorised institutions (AIs) to adopt a risk-based approach to differentiate and understand the risks of customers, including VASPs.
The regulatory authority additionally stressed the importance of streamlining the customer registration process, emphasising that the due diligence procedures should not impose excessive burdens.
Hong Kong making giant strides
Hong Kong is ramping up efforts towards achieving its ambition of becoming a prominent cryptocurrency hub. In the past few weeks, it has made notable efforts to establish a favourable regulatory environment, encourage innovation, and attract industry players.
In May, Hong Kong passed a new rule that allows licensed exchanges to serve retail traders. Following the rule, industry heavyweights including the likes of Huobi and Gate.io submitted applications for virtual asset licences.
The country’s efforts have also received significant boosts by the United States’ hardline stance on cryptocurrencies. After the SEC sued Coinbase, Hong Kong legislator, Johnny Ng Kit-chong extended an invitation to the exchange to apply for a licence in Hong Kong. He further offered to support their development plans.
Companies within the space are already lining up to key into the benefits of Hong Kong’s lofty ambitions. According to a report by the country’s Financial Secretary, more than 150 Web3 companies have now commenced operations in Hong Kong through its Cyberport program.