Hong Kong Restricts Trading of Crypto ETFs to ‘Professional Investors’ Only

Hong Kong’s financial regulators argue crypto spot ETFs pose considerable risks and have justified their move as protecting retail investors

article-image

Hong Kong Monetary Authority. Front entrance of Two IFC skyscraper, Hong Kong. Credit: Shutterstock

share

key takeaways

  • Financial regulators in Hong Kong have limited the sale of crypto spot ETFs to professional investors only
  • Professional investors in Hong Kong are defined as having a portfolio of no less than HKD$8 million (US$1 million)

Financial regulators in Hong Kong have issued new rules restricting virtual asset intermediaries from offering crypto spot exchange-traded funds (ETFs) to retail investors.

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) said their motive is based on protecting investors due to “risks associated with investing in virtual assets,” according to a joint circular on Friday.

While that view is not entirely novel, restrictions placed on crypto intermediaries selling “complex products” to retail investors are new. Though crypto spot ETFs have been targeted, the “professional investors only” restriction is not being imposed for the distribution of futures-based crypto ETFs.

Under the country’s Securities and Futures rules, professional investors are defined as having a portfolio of no less than HKD$8 million (US$1 million).

“In the case of virtual asset futures contracts traded on a specified exchange which is a regulated futures market, trading is governed by conventional rules. Pricing transparency and potential market manipulation may be less of a concern,” the circular reads.

Crypto ETFs typically track a basket of digital asset prices, allowing an investor to diversify their crypto portfolio while forgoing the need to hold any individual assets. Canada, Brazil, parts of Europe and Dubai have already launched crypto ETFs. Futures-based crypto ETFs, on the other hand, track the price of futures contracts speculating on the future price of bitcoin.

The US approved its first bitcoin futures-based ETF back in October, signaling to the rest of the world that while it is not yet ready to greenlight a crypto spot ETF, futures-based products offer satisfactory investor protections as the ETF mediates with brokerages under the eye of regulated jurisdictions.

Hong Kong’s regulators also set out guidance on spot ETFs requiring a “knowledge test” so the intermediary can either accept or block an investor’s trade after determining whether the investor is aware of how the spot ETF product works.

“If a client does not possess such knowledge, the intermediary may only proceed if, by doing so, it would be acting in the client’s best interests and it has provided training to the client on the nature and risks of virtual assets,” the circular reads.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (5).png

Research

Outside of stablecoins, the value of tokenized assets sits below $20B, dominated by the following asset classes: private credit, US Treasuries, commodities, institutional alternative funds, stocks, non-US government debt, and corporate bonds. In the coming months, we see the greatest opportunities in the tokenization of illiquid markets, particularly private equity. However, the successful integration of offchain assets into blockchain ecosystems relies heavily on clear and consistent regulatory frameworks, with purpose-built infrastructure to support it.

article-image

Coinbase Asset Management and One River CEO Eric Peters explains why crypto’s not yet focused on fundamentals

article-image

Over the past 24 hours, PumpSwap’s largest liquidity pool by volume contains tokens with the tickers DOGEMOON and ballscoin

article-image

10T Holdings’ Dan Tapiero predicts crypto listings on exchanges are a “mini step” for value moving onchain

article-image

The S&P 500 was mostly flat after a month of losses, and the Nasdaq has been slowly gaining

article-image

Movement Labs is once again at the core of some criticism after it declined to name a market maker offboarded by Binance

article-image

Experts discuss the future of crypto ETFs as Trump puts “money where his mouth is”