One year after the Hong Kong Futures Commission (SFC) published the initial rules for funds investing in cryptography, only one company managed to meet this challenge.
Diginex, based in Hong Kong, remains the only cryptography fund to overcome the regulatory hurdles set in November 2018 and formalized in October, according to a Reuters study.
As CoinDesk pointed out at the time, the 2018 framework applies new regulations to any fund investing 10% or more of its portfolio in virtual assets. The 37-page guidelines issued last month adopt many standard practices applied by funds already controlled by the regulator, such as available capital reserves. The new rules include, for example, who can act as the custodian for encryption assets.
According to Reuters, only one company has broken through the barriers of the SFC so far, while other funds leave Hong Kong to "bypass" the SFC. According to a Reuters study, many companies are also seeking approvals without intent to receive the license, but only for appearances.
However, external factors remain for low volume, including the possibility of a crypto bear market hangover that could give rejected funds a second thought.
"The volatility and low yields in 2018 have dissuaded large institutions from allocating cryptographic funds, forcing those who have survived to put aside their licensing plans," Jehan Chu, a Kenetic Capital partner, told Reuters venture capital firm specializing in digital assets.
SFC declined to comment on both the process and pending applications, Reuters said.
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