Hong Kong Exchanges and Clearing Launches Virtual Asset Index Series, Aiming to Become Asia's Digital Currency Hub

Hong Kong Exchanges and Clearing Launches Virtual Asset Index Series, Aiming to Become Asia's Digital Currency HubHong Kong Exchanges and Clearing (HKEX) announced that it will launch the HKEX Virtual Asset Index Series (Index Series) on November 15, 2024. The Index Series aims to provide reliable benchmark prices for the rapidly developing virtual asset sector and contribute to Hong Kong becoming a leading digital asset center in Asia

Hong Kong Exchanges and Clearing Launches Virtual Asset Index Series, Aiming to Become Asia's Digital Currency Hub

Hong Kong Exchanges and Clearing (HKEX) announced that it will launch the HKEX Virtual Asset Index Series (Index Series) on November 15, 2024. The Index Series aims to provide reliable benchmark prices for the rapidly developing virtual asset sector and contribute to Hong Kong becoming a leading digital asset center in Asia.

The Index Series will cover Bitcoin and Ethereum, providing a transparent and reliable benchmark for their pricing in the Asian time zone. It aims to address the issue of price discrepancies between virtual assets traded on global exchanges. The Index Series is based on a benchmark spot price weighted by the 24-hour trading volume of Bitcoin or Ethereum, calculated based on aggregated market prices from multiple major virtual asset exchanges, and priced in US dollars in real-time.

In addition to reference indices, the series will also include a reference rate specifically designed for financial product settlement, which is calculated at 4:00 PM Hong Kong time daily. The Index Series will be the first virtual asset index series in Hong Kong that complies with the European Benchmark Regulation (BMR) and will be managed and calculated by CCData, a virtual asset data and index provider, in collaboration with a benchmark management institution registered in the UK.

This initiative is part of HKEX's efforts in the virtual asset space and demonstrates Hong Kong's commitment to becoming Asia's cryptocurrency trading hub. As early as 2022, Hong Kong released a policy statement on virtual asset development, aiming to nurture a vibrant virtual asset industry and ecosystem. In the same year, Hong Kong approved license upgrades for two major cryptocurrency exchanges, HashKeyGroup and OSL, allowing them to offer trading services to retail investors. In April this year, the Hong Kong Securities and Futures Commission (SFC) approved the first issuance of six digital currency spot ETFs by Hua Xia (Hong Kong), Bosera International and GF International. These ETFs officially listed on HKEX on April 30.

To further develop and expand Hong Kong's virtual asset market, Ye Chi-hing, Executive Director of the Intermediaries Division of the SFC, outlined the following measures in his speech at the Hong Kong FinTech Week 2024:

Fast-track Licensing Process: The SFC's existing regulatory measures include risk-based on-site inspections and direct dialogues with applicants' senior management and controllers. Building on this, the SFC is implementing a fast-track licensing process to handle applications from virtual asset trading platforms deemed fit for licensing. The first batch of formal licenses is expected to be issued to these applicants by the end of this year.

Virtual Asset Trading Platform Consultative Group: To support licensed virtual asset trading platforms in developing sustainable business models, the SFC is establishing a formal consultative group for all licensed virtual asset trading platforms, composed of representatives from each licensed institution, to ensure that their views are considered during policy formulation.

Tokenization and Ensemble Project: The SFC will continue to support industry initiatives related to tokenization. The SFC is a core member of the architecture working group for the Hong Kong Monetary Authority's (HKMA) Ensemble Project, jointly leading the tokenization solutions for the asset management industry. The Ensemble Project plays a crucial role in establishing the infrastructure needed for a tokenized ecosystem in Hong Kong, ultimately leading to the development of industry standards for tokenized asset settlement.

The launch of the HKEX Virtual Asset Index Series, along with a series of supporting policy measures, will further propel the development of Hong Kong's virtual asset market. It also signifies that the Hong Kong government and financial institutions are actively embracing digital assets, providing investors with a safer, more transparent, and reliable trading environment.

With the advancement of the virtual asset sector, Hong Kong is poised to become a significant digital asset center in Asia and globally, leading innovation in global financial markets.