Usman Salis
Hong Kong sees the debut of spot cryptocurrency exchange-traded funds (ETFs), led by major mainland Chinese asset managers, amid a global surge in demand.
Spot ETF Rollout in Hong Kong
Hong Kong emerges as a contender in the global crypto ETF race, as the Asian financial hub introduces its first spot cryptocurrency exchange-traded funds on Tuesday. This move mirrors similar initiatives in the US, marking a significant step in the region's cryptocurrency market development.
Three mainland Chinese asset management giants, including Bosera Asset Management, Harvest Global Investments, and China Asset Management, launched two ETFs each tracking bitcoin and ether prices. These ETFs, in collaboration with HashKey Capital, mark a milestone in Hong Kong's crypto asset market, positioning the city as a key player in Asia's crypto evolution.
Market Performance and Turnover
The debut of Hong Kong's spot ETFs sees mixed performance, with bitcoin ETFs closing higher by 1.5-1.8%, while ether ETFs experience slight declines of 0.5-0.8%. Despite this, total trading turnover reaches approximately HK$99.5 million (US$12.7 million), signaling investor interest in these new offerings.
The launch of these ETFs aligns with Hong Kong's strategic objective to establish itself as a leading cryptocurrency hub, particularly amidst challenges posed by pandemic restrictions and Beijing's regulatory measures. Joseph Chan, Hong Kong's under-secretary for financial services and the treasury, emphasizes the significance of this milestone in solidifying Hong Kong's position in Asia's crypto landscape.
Comparison with US Market
While Hong Kong makes strides in the crypto ETF arena, the US remains a formidable player, having introduced similar products earlier in January. Notably, BlackRock's iShares Bitcoin Trust boasts over $17 billion in assets under management, reflecting substantial investor confidence and market demand.
Robert Zhan, director of risk consulting at KPMG China, expresses optimistic forecasts for Hong Kong's ETFs, anticipating potential net inflows exceeding $3 billion. However, market sentiment remains cautious, evidenced by minor price declines in bitcoin and ether following the ETFs' listings.
Industry Excitement Amid Regulatory Challenges
Despite regulatory hurdles and warnings from Chinese authorities against cryptocurrency trading, the launch of crypto-linked funds by major mainland asset managers sparks enthusiasm within the industry. Donald Day, chief operating officer at Hong Kong-based digital asset exchange VDX, highlights the potential of these funds to cater to active investors outside of US trading hours.
In conclusion, Hong Kong's entry into the crypto ETF market signifies a significant milestone in the region's financial evolution, positioning the city as a key player in the global crypto landscape.
Usman Salis
