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On January 10, 2024, the United States Securities and Exchange Commission (SEC) approved several applications for spot Bitcoin ETFs. On day one$4.6 billion worth of shares were traded, with cumulative trading volume exceeding the $50 billion mark by February 22. The approval of ETFs in the United States is expected to have a considerable impact on Asian markets where investment flows are already significant, particularly in institutional investmentand picks up the pace.
The question on the minds of observers, investors and industry players is: “What’s next?” » By taking stock of what happened in the United States and looking east, we can better understand what to expect in markets like Hong Kong and other countries in the region.
Spotlight on Hong Kong
There is optimism that a spot Bitcoin ETF will be approved in Hong Kong. In January, they accepted the first application from one of China's leading asset funds, Harvest Fund Management. Although there were hopes for approval as early as the first quarter of 2024, it would not be surprising if it takes at least until the second quarter. Approvals of traditional ETFs by the Hong Kong Securities and Futures Commission (SFC) typically take weeks or even months.
Given that Hong Kong has already approved a few crypto ETF futures funds, including CSOP Bitcoin Futures, CSOP Ether Futures, and Samsung Bitcoin Futures, it is reasonable to hope that the path to one-time ETF approval will come with time.
On the face of it, giving these approvals would make sense on all counts. Hong Kong serves as a conduit to China's wealth and has established a regulatory environment suited to the depth of its asset and wealth management sector. Additionally, as Hong Kong already offers Ethereum futures, they might be more open to scouting Ethereum ETFs.
In relation to the United States, the SEC has received applications for Ethereum spot ETFs with a response required by May 23, although it has been authorized earlier; on February 7, the SEC issued a delay statement.
Assessing the likelihood of approval by other Asian countries
The only major countries in the APAC region where spot Bitcoin ETFs are not at any stage of development appear to be China, Thailand and Singapore. Major Asian countries likely to follow the general path of the United States and Hong Kong include Japan, South Korea, and Australia; Even though we're just getting started, people are already expressing interest in these products. Each country's regulations are somewhat different, and so the paths to approval of crypto products will also be different.
South Korea
The National Virtual Asset User Protection Law is expected to take effect in July 2024. It gives the Financial Services Commission of South Korea and the Bank of Korea the power to authority to supervise crypto exchanges and custodians. Although news reports have provided conflicting information on the likelihood of timely Bitcoin approvals, two key factors provide cause for optimism.
First of all, The politicians those running for office are more open to the idea. Next, Governor Lee Bok-hyun of the Financial Supervisory Service will meet with US SEC Chairman Gary Gensler at Can to discuss Bitcoin spot ETFs. At a minimum, this shows South Korea's openness to the financial product.
Japan
There are also encouraging signs in Japan. According to the Ministry of Economy, Trade and Industry, the country's government approved a bill which allows investment funds and venture capital firms in the country to acquire cryptocurrencies. If passed by Parliament, it will become law. Additionally, some of the country's largest financial institutions, part of a consortium of more than seventy Japanese companies, are expected to launch a yen-backed digital currency in July 2024 privately..
This is in addition to the Japanese government pension fund. rrecently mentioning that he is asking for information on “illiquid assets”, such as bitcoin, as part of the search for potential new investments. While neither of these actions will directly enable a spot Bitcoin ETF, they will both play a role in creating a more crypto-friendly environment.
Australia
Australia enthusiasm as Bitcoin “obviously changed” after SEC approval. Across all demographics, positive sentiment towards Bitcoin increased by 25%, while, looking specifically at those aged fifty-five and over, the news increased Bitcoin favorability by 100%. Moreover, this enthusiasm already has a exit many people in Australia are able to invest in US ETFs, with forecasts suggesting the Australian Securities Exchange will soon offer similar products.
Monochrome Asset Management, located in Brisbane, Australia, is already widely expected to launch a spot Bitcoin ETF in the first half of 2024, with the possibility of US approval accelerating approval.
What’s Stopping More Regulatory Approved Crypto Companies?
As countries create regulations and structures for crypto products around the world, two key topics arise regularly: the need for anti-money laundering (AML) and terrorist financing (CTF) rules. This could be particularly important in Asia, where the threat of money laundering and terrorist financing is significant.
Hong Kong and Singapore, for example, have strict requirements for exchanges wishing to receive a crypto license. Then, transactions are strictly monitored and know your customer (KYC) procedures are followed diligently. As these are key financial centers, mistakes can have costly consequences, including reputational damage for companies that skip steps or fail to comply.
In South Korea, all registered and licensed exchanges must have a banking partner due to money laundering and terrorism financing concerns in North Korea. When opening a crypto account in this Asian country, bank details and KYC data are linked to the crypto exchange account for transparent fund flows to address regulators' concerns.
For the one-time approval of Bitcoin ETFs, questions regarding market manipulation – a concern raised by Gensler during the delay in US approval – will also need to be addressed to the satisfaction of Asian regulators. Visibility is also important to allow regulators and investors to feel confident, which will help crypto products become a larger piece of the financial pie. These structures and safeguards can ease concerns and lay the foundation for future growth. Additionally, safe and secure custody of crypto products must be firmly implemented in Asia and globally.
Optimism exists that all of this foundational work will be completed in a way that allows Asian countries to participate in high-demand crypto products, such as Spot Bitcoin and Spot Ether ETFs, in a manner that will satisfy AML, CTF and market manipulation, with safe and secure custody. .
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