Hong Kong-based Diginex is the only firm to have successfully cleared the SFC regulatory hurdles in the first year.
A year back in November 2018, the Hong Kong Securities and Futures Commission presented the guidance for funds that are invested in crypto.
As per a media report, last year’s structure published the regulations for funds that invested a minimum of 10 percent of its financial portfolio in crypto or virtual assets.
They issued regulations containing 37 pages in October. They took into account the norms and practices applied in funds like the capital reserves. The latest rules provide guidance about who can become an overseer for virtual assets.
According to Reuters, only one crypto fund passed the SFC’s regulatory hurdles so far. Other firms are evading the SFC and leaving Hong Kong. A few firms are even requesting consent without the actual intent of obtaining the license.
Many external factors are responsible for the low volume. The factors include the likely after-effects from the cryptocurrency bear market.
Jehan Chu, the managing partner at Kenetic Capital, a digital asset-based VC firm, said,
“The volatility and poor returns in 2018 scared large institutions away from allocating to crypto funds, causing those who survived to shelve their licensing plans.”
The SFC did not comment on the processing and unsettled applications.