Hong Kong Stock Exchange to Launch Unified Bitcoin and Ethereum Index

The Hong Kong Stock Exchange (HKEX) announced the launch of the Hong Kong Exchange Virtual Asset Index Series. 

Scheduled for release on November 15, 2024, this series will serve as a unified benchmark for Bitcoin and Ethereum, addressing regional pricing gaps in these widely traded assets. This initiative aims to provide consistent and reliable pricing within the Asian time zone (UTC+8), enhancing transparency for investors in the region.

Cryptocurrency prices have historically fluctuated widely across global exchanges due to various factors like liquidity and regional demand. For investors in Asia, this new series reportedly provides a clear, consistent pricing framework that factors in data from several exchanges. 

Notably, the indices will be available in United States dollars (USD), giving a universally accepted valuation standard that transcends currency fluctuations and local economic influences.

HKEX also aims to attract institutional investors by offering a standardized benchmarking system and high transparency.

The move reflects HKEX's ambition to become an Asia Pacific (APAC) hub for digital finance, especially as digital assets gain popularity worldwide.

A Unified Reference Price for Bitcoin and Ethereum

The HKEX Virtual Asset Index Series is designed to deliver a volume-weighted, real-time pricing benchmark for Bitcoin (BTC) and Ethereum (ETH), derived from aggregated data from leading global crypto exchanges. According to Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing Limited:

"We are pleased to introduce the Hong Kong Exchange Virtual Asset Index Series to meet the regional demand for this rapidly emerging asset class. By providing transparent and reliable real-time benchmarks, we hope to assist investors in making informed decisions, supporting the healthy development of the virtual asset ecosystem."

Aguzin believes that a reliable and standardized benchmark will address existing price discrepancies across exchanges, giving traders and institutions in Asia a stable reference.

Tax Breaks and Licensing for Crypto Investments

In parallel with this index launch, Hong Kong regulators are introducing supportive policies for digital asset investment. 

Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, announced a proposed tax break for digital asset investments according to an Oct. 28 Bloomberg report. This legislation, expected by the end of 2024, could reduce taxes for citizens who hold crypto assets. 

Hui noted that this move reinforces Hong Kong’s commitment to being an attractive jurisdiction for asset allocation.

Additionally, the Hong Kong Securities and Futures Commission (SFC) is preparing a finalized list of fully licensed crypto exchanges by year-end, with plans for a regulatory panel to review licensing in early 2025. Per reports, with this framework, over-the-counter (OTC) trading and custodial services will be more secure and compliant.

Stablecoin Regulation and Future Developments

Hong Kong’s de facto central bank, the Hong Kong Monetary Authority (HKMA), has announced plans to introduce stablecoin legislation by year-end. This legislation follows the HKMA’s stablecoin regulatory sandbox, launched in March 2024, which encourages innovation while monitoring potential risks in stablecoin use.

Stablecoin regulation by the HKMA is part of Hong Kong's proactive approach to creating a regulated environment for digital assets.