Hong Kong is considering entering the market for spot cryptocurrency exchange-traded funds (ETFs), which has sparked excitement among enthusiasts. The Securities and Futures Commission (SFC) is evaluating its options. Hong Kong has been following in the footsteps of the US in terms of approving crypto ETFs, approving a futures Bitcoin ETF shortly after the US SEC did so in October 2021. Hong Kong’s plans to become a Web3 hub could propel it ahead of the US in approving spot-based crypto ETFs. In October, the SFC updated its rules to allow intermediaries to offer residents broader virtual currency services. Hong Kong’s push in this area could potentially force the SEC’s hand to approve spot ETFs, with the possibility of capital and talent flowing to other jurisdictions. Some experts view this as a warning to the SEC that stifling innovation in the US could lead other countries to fill the void. The SEC has been hesitant to approve spot ETFs due to concerns about safety, volatility, security risks, and tracking errors in the asset class. However, there are also enthusiasts hoping for regulatory approval to attract traditional investors and improve convenience and liquidity in the Bitcoin markets. Some traders anticipate a price rally following approval, with one research firm predicting a Bitcoin price of $150,000 by 2025.

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