Reported by Zhao Yi, Hu Jinhua, a reporter from China Times (www.chinatimes
Reported by Zhao Yi, Hu Jinhua, a reporter from China Times (www.chinatimes. net. cn) in Shanghai
Recently, the world's largest cryptocurrency by market value, Bitcoin, rose above $30000, reaching its highest price since June last year, and has been hovering around $30000 since then. But on the morning of April 20th, Bitcoin experienced a significant correction, with a drop of over 5%. As of press release, the latest price of Bitcoin was $28896.04, a decrease of 4.02% within 24 hours.
As is well known, the prices of virtual assets fluctuate greatly. Traditional investments in virtual assets such as Bitcoin are generally made in the form of spot transactions, but their liquidity depends on the virtual asset exchange and there are certain trading risks. Recently, the Hong Kong Stock Exchange released a research report titled "The Development of ETFs and the Virtual Asset Ecosphere in Global Financial Markets". The report believes that indirectly entering the virtual asset market through ETFs is safer, more compliant, and more controllable in terms of risks.
As of now, there are two Bitcoin futures ETFs and one Ethereum futures ETF on the Hong Kong market in China.
The compliant operation of the virtual asset industry is a necessary path to enter the mainstream financial market, "Yu Jianing, President of UWEB and Executive Director of the Metaverse Industry Committee of the China Mobile Communications Federation, told China Times. The launch of the virtual asset futures ETF by the Hong Kong Stock Exchange represents the official landing of a virtual asset compliant investment tool in Hong Kong, China, in addition to the North American market, It also represents a new wave of virtual asset compliance investment in the Asian market.
ETFs are safer and more controllable
According to the report, entering the virtual asset market can be achieved through direct channels, such as buying and selling cryptocurrency through cryptocurrency brokers or cryptocurrency exchanges; It is also possible to invest in blockchain companies' stocks, cryptocurrency futures, ETFs, and other funds through indirect channels. The Hong Kong Stock Exchange believes that indirectly entering the virtual asset market through ETFs is safer, more compliant, and more controllable in terms of risks.
On October 31, 2022, the Hong Kong Securities Regulatory Commission issued a circular on virtual asset futures exchange traded funds, which began accepting applications for recognition of virtual asset futures ETFs and implementing relevant regulatory requirements to protect investors. Subsequently, the first two virtual asset ETFs in Asia were officially listed on the Hong Kong Stock Exchange on December 16, 2022. In January 2023, the third virtual asset ETF in the Hong Kong market was listed.
The report points out that the successful launch of virtual asset ETFs in Hong Kong reflects the authorities' determination to develop the Hong Kong virtual asset ecosystem and the market's demand for related products. Looking ahead, it is expected that the Hong Kong market will launch more virtual asset themed ETFs and other virtual asset products.
An Guangyong, an expert from the Credit Management Committee of the All China Association for Mergers and Acquisitions, told reporters from China Times that ETFs are a fund product designed to track specific indices or asset portfolios and provide liquidity and low-cost trading methods similar to stock trading. For the virtual asset market, ETFs can provide investors with more convenient and transparent investment methods, thereby further promoting the development of the market. In addition, as an investment tool with high liquidity and low transaction costs, ETFs can attract more funds to enter the virtual asset market, bring more liquidity and stability to the market, and promote the healthy development of the market.
The report shows that as of the end of November 2022, there are a total of 40 virtual asset ETFs in multiple markets in Canada, Brazil, the United States, and Australia, with a total asset management scale of $2.4 billion.
Industry insiders also told reporters from China Times that ETF products can not only improve the liquidity and transparency of the virtual asset market, allowing more investors to participate in the virtual asset market, but also provide investors with diversified investment options, allowing them to allocate assets and diversify risks among different virtual assets. At the same time, ETF products can provide investors with more convenient and low-cost investment methods, reducing their investment barriers and risks.
In recent years, regulatory policies for virtual assets around the world have gradually improved, mainly including anti money laundering, counter-terrorism financing, capital flow control, taxation, and other aspects. An Guangyong believes that the introduction of these policies will help eliminate negative participants and violations in the market, enhance market transparency and compliance, improve investor confidence and market stability, and promote the development of the virtual asset market towards a more mature and standardized direction.
The virtual asset market is still in a stage of rapid development and transformation, and the future development trend and direction are still uncertain. An Guangyong reminds investors that the virtual asset market has high volatility and investment risks, and they need to carefully evaluate their risk tolerance and investment objectives, and choose appropriate investment products and strategies. In addition, investors also need to closely monitor market changes and the evolution of regulatory policies in order to make timely adjustments and decisions.
The virtual asset market is experiencing explosive growth
In the past three years, the market value of the cryptocurrency market has been continuously expanding, and the types of cryptocurrencies have also shown explosive growth. The report shows that the market value of virtual assets has increased from $10.3 billion in 2013 to $1076.6 billion in January 2023; The number of cryptocurrencies has significantly increased from 7 in April 2013 to 22375 at the end of January 2023.
From a structural perspective, as the number of people holding cryptocurrencies increases, the proportion of derivatives gradually expands. The average daily transaction volume of cryptocurrencies (including spot and derivatives) was only $31.8 billion in 2019, but it has grown to $136.1 billion by 2022.
The number of people holding virtual assets globally increased from 306 million in January 2022 to 425 million in December 2022; The trading volume of crypto derivatives in 2021 exceeded that of spot trading, and the trading volume of derivatives in 2022 was almost twice that of spot trading. The Hong Kong Stock Exchange stated that direct investment in virtual assets may require mastery of technical knowledge related to the virtual asset market, and the risks involved may also be significant before the regulatory system is mature.
Chen Duan, Director of the Digital Economy Integration, Innovation and Development Center at the Central University of Finance and Economics, told reporters from China Times that the release of such a report with the Hong Kong Stock Exchange as the main body has clear directional significance. In the past two years, Hong Kong and Singapore have been building their own new round of financial competitive advantages for digital assets.
Indeed, while the virtual asset market continues to develop, Hong Kong is intensifying its layout. On January 31 of this year, the Hong Kong Monetary Authority released the "Consultation Summary of the Discussion Paper on Cryptographic Assets and Stable Currency", proposing to include several activities related to stable currency in regulation, and elaborating on the expected regulatory scope and main regulatory requirements. The Hong Kong Monetary Authority also stated that it will make timely announcements on regulatory arrangements and next steps. On April 11th, the Web3.0 Association in Hong Kong, China was officially established; On April 12, Shanghai Data Exchange put forward the Shanghai Hong Kong linkage mechanism of digital assets for the first time, and Hangzhou Shangcheng District Government and Hong Kong Trade Development Council jointly signed the Hangzhou Hong Kong Web3 Industry Linkage Memorandum; On June 1st, the new licensing system for the regulatory virtual asset trading platform of the Hong Kong Securities Regulatory Commission will officially take effect.
Recently, the latest Financial Budget released by the Hong Kong SAR government showed that HKD 50 million will be allocated to Cyberport to accelerate the development of the Hong Kong Web3.0 ecosystem, especially to promote cross-border business cooperation. At the beginning of this year, Cyberport established the "Cyberport Web3 Base" to better gather global Web3.0 startups and talents.
The Chief Executive of the Hong Kong Special Administrative Region, Li Jiachao, revealed during the establishment ceremony of the Hong Kong Web3.0 Association on April 11th that in recent months, many leading innovative enterprises and high-tech startups have actively contacted the SAR government and are considering expanding their business in Hong Kong. These enterprises include virtual asset exchanges, blockchain infrastructure construction enterprises, virtual currency wallets and payment enterprises, as well as other Web3.0 related projects, which are believed to contribute to the flourishing development of the Web3 ecosystem.
In order to make Hong Kong the best foothold for virtual asset enterprises, we need to provide appropriate regulation for the market and unleash the potential of Web3.0 and related technologies. "Li Jiachao introduced that the new licensing system set up for virtual asset service providers will be implemented in June, providing a certain degree of market recognition for virtual asset exchanges, ensuring stable and orderly development of the market, and protecting the interests of investors.
In Chen Duan's view, currently, in the early stages of development, virtual assets may be referred to as digital assets in the future. Virtual assets require a real world value mapping in order to achieve more sustainable development in the long term. Including the metaverse, there is its own identity system, asset system, economic system, and social system within the metaverse. However, the metaverse cannot do without mapping to the real world, and it is not completely nihilistic.
In the past two years, the policy regulation of virtual assets has been constantly improving, which is an inevitable trend. Chen Duan said that the rapid expansion of virtual assets will disrupt the operational order of the real economy. If it produces too fast and strong wealth creation effects, it will accelerate the hollowing out of the social and economic system. If virtual assets expand rapidly like runaway wild horses and form a siphon effect on talents and social resources, it is not conducive to the Digital transformation and upgrading of traditional industries. So we need to strengthen legislation and guide virtual assets through policies to truly empower the real economy, which is more conducive to innovation driving the healthy and sustainable development of the economy and society.
The reason for strengthening license licensing is also to strengthen the responsibility of the main body, guide relevant entities to serve the overall needs of social development in the direction of innovation, and not to form a situation where the innovation emergence effect guided by the pursuit of pure financial profits continues to increase the tension of the existing social operating system.
Yu Jianing believes that with the arrival of Web3 and the metaverse, distributed ledger technology and Web3 have the potential to become the future development trend of finance and commerce, making the importance of virtual assets increasingly prominent. The development trend of the virtual asset industry in the future will continue to be a sustainable development path with digital technology innovation as the core driving force, business model innovation as the manifestation, and application scenario expansion as the essence. It will also continue to maintain high volatility, and it is not ruled out that there will be a deep correction in the future.
Meanwhile, Yu Jianing also admitted that there is indeed a series of chaos in the field of virtual assets. Some virtual assets have unrealistic promotion and hype, leading to market valuations deviating from basic values or being given high expectations. In addition, there are some assets that do not actually utilize blockchain technology in essence, but only obtain valuations that are completely inconsistent with their actual value under the banner of blockchain. The so-called innovation of many projects deviates from the needs of the real economy and is purely speculative behavior. In addition, some "air currency" projects are essentially fraudulent and pyramid schemes, and market manipulation and other behaviors are common, essentially disrupting the financial order.
Although virtual assets have not yet had a substantial impact on the stability of the financial system, the problems exposed in development such as market manipulation, fraud, insufficient investor protection, and money laundering have attracted extreme attention from regulatory authorities in various countries, "Yu Jianing said.
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