Hong Kong plans to follow the US lead by listing a group of top Chinese asset managers, Bloomberg reports. Hong Kong has been competing with places like Singapore and Dubai to develop a home for a strictly regulated virtual asset industry, part of an effort to restore the city’s reputation as a modern financial hub after a crackdown on dissent made it less attractive. The level of demand for upcoming ETFs will provide clues to Hong Kong’s progress. Chinese wealth parking in the city is one source of latent demand, as are active cryptocurrency exchanges and market makers in the Asia-Pacific region. However, Hong Kong does not have the ‘BlackRock’ effect it can rely on, as the US has. Instead, Hong Kong has given the green light to this approach. This approach is particularly attractive to cryptocurrency native users, market makers and digital asset exchanges because it can improve efficiency and arbitrage opportunities. Hong Kong already allows cryptocurrency futures-based ETFs, and has listed three so far. Officials are evaluating about two dozen applications to expand the list of Hong Kong’s current two licensed digital asset exchanges. The city is also developing a framework for stablecoins, a token pegged 1-1 to a fiat currency and typically backed by cash and bond reserves. Whether Hong Kong can successfully foster a cryptocurrency hub remains an unknown.
