Hong Kong’s burgeoning cryptocurrency industry is facing headwinds in its pursuit of spot exchange-traded funds (ETFs), according to Gary Tiu, Executive Director and Head of Regulatory Affairs at OSL.
Speaking at the Foresight 2024 conference, Tiu highlighted a systemic issue hindering the growth of ETFs in the region. The Hong Kong market is heavily reliant on intermediaries like brokers and banks, who earn substantial commissions from distributing financial products. This structure incentivizes unlisted products over ETFs, which offer lower commission rates.
“ETFs provide very little incentives for equity brokers of around a few basis points of commission, which is about 1% to 2% of commission derived from selling a structured product,” Tiu explained.
Beyond the structural challenges, Tiu also pointed to a broader negative bias towards cryptocurrencies in Hong Kong. “I think there is still a bit of a bias in the eyes of the regulators and also in the eyes of the financial institutions, that somehow bitcoin ETF is just this unique class of risk that you need to be extra cautious about,” he stated.
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Tiu’s comments underscore the complex interplay of market structure, regulatory sentiment, and investor perception that is shaping the landscape for crypto ETFs in Hong Kong. While the region has made strides in embracing digital assets, overcoming these hurdles will be crucial for the development of a mature and accessible crypto ecosystem.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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