Few of Hong Kong’s fund managers have been approved to invest in cryptocurrencies, despite legislation inviting them to do so, according to a report today by Reuters

Late last year, the Hong Kong Securities and Futures Commission (SFC) launched a scheme that would let fund managers invest in cryptocurrencies, but, despite dozens of applications, Reuters found that just one fund, Diginex, had been approved by the SFC. 

Diginex won approval in June. “We believe it is vital to be regulated to build trust with our clients but also in the industry,” the CEO of Diginex, Richard Byworth, told Reuters. 

Why? “Not many new managers in this area have the background, experience or support to mount such an undertaking, and this has meant that many applications never even get started,” Gaven Cheong, a partner at law firm Simmons & Simmons, which advised on Diginex’s application, told Reuters.

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Other advisers told Reuters that it is because the industry is still fairly new, and the infrastructure to invest in cryptocurrencies does not yet exist. “My take is it is more an operational and infrastructure issue, than the regulator being obstructive,” Rocky Mui, a partner at Clifford Chance in Hong Kong, told Reuters.

Others pointed to the 2017 bubble, which, having popped, scared investors away. 

Late last month, the SFC published a 37-page guidance document, "Pro forma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets.” It provides information for fund managers handling digital assets, suggesting that the government is committed to making it easier for fund managers to comply with regulations.