Hong Kong Securities and Futures Commission approves Bitcoin fund for the first time, opening doors for institutional investors.

The Securities and Futures Commission of Hong Kong has approved the region's first cryptocurrency fund with a target size of $100 million in its first year. The fund will provide institutional investors with a compliant Bitcoin investment vehicle.

Hong Kong Securities and Futures Commission Approves Bitcoin Fund

According to a report by Bloomberg, Arrano Capital, the blockchain division of Hong Kong asset management company - Diginex, has finally received approval from the Securities and Futures Commission (SFC) after negotiations, to launch a Bitcoin fund this month. The goal is to manage over $100 million in digital assets within the first year. Avaneesh Acquilla, Chief Investment Officer (CIO) at Arrano, stated:

"We decided to launch this fund to meet the market demand from professional investors who are increasingly viewing Bitcoin as an alternative store of value. Ultimately, for Bitcoin to gain broad acceptance and trust, it needs regulation."

Additionally, Avaneesh Acquilla mentioned that this is just the first step, with the product being a tracker fund following the price of a single asset (BTC). The ultimate goal is to launch a second compliant cryptocurrency fund managing portfolios later in 2020.

The Importance of Regulatory-Compliant Products

Since the Hong Kong Securities and Futures Commission began officially regulating cryptocurrency exchanges in October 2018, very few such funds have been approved. Diginex, a blockchain financial services company, was one of the first companies to obtain a license for regulated digital assets in June 2019, but even these early license holders could not meet the standards for issuing purely cryptocurrency funds.

While global institutional investors and family offices have had the capability to invest in digital assets like Bitcoin and Ethereum on their own, investment products recognized by regulatory bodies still hold significance. For example, the Bitcoin fund - GBTC launched by the U.S. asset management company Grayscale has seen increasing trading volumes in recent years, even experiencing significant premiums, indicating that regulated investment products still hold great appeal for institutional investors.

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