Bitcoin
Asia’s First Bitcoin and Ether ETFs Debut in Hong Kong
Representations of the cryptocurrency Bitcoin are placed on a PC motherboard in this illustration taken on June 16, 2023.
Given Ruvic | Reuters
Hong Kong Securities and Futures Commission (SFC) approved the three ETF providers two weeks ago.
ChinaAMC, Bosera HashKey and Harvest spot bitcoin ETFs were over 3% higher in early trading but later gave up some gains to trade about 1.5% higher. The three Ether ETFs were trading above 1% in the morning but fell into negative territory by late afternoon.
Bitcoin was trading at $63,218 at 3:50 a.m. ET, while ether it was trading at $3,159, according to data from Coin Metrics.
Hong Kong is one of the first places in the world to approve an Ether ETF. In January, the The U.S. Securities and Exchange Commission approved changes to allow the creation of bitcoin ETFs in the US, but there is has not yet approved an ether ETF.
Crypto ETFs allow investors to gain exposure to the price movement of underlying assets without having to own the asset directly.
The move is seen as positive for Hong Kong markets.
“There is a bigger game at play here: the launch of these new ETFs puts Hong Kong a step ahead of Singapore and Dubai, which are also trying to establish themselves as regulated hubs for digital assets,” Antoni Trenchev, co-founder of cryptocurrency exchange Nexo. told CNBC on Tuesday.
“First-mover advantage is everything in this game.”
Trenchev said Japan, Singapore and South Korea could be next to approve similar products in the next two years.
Executives from Chinese asset managers inaugurated the debut of their ETFs on the Hong Kong Stock Exchange on Tuesday morning, highlighting that the move will allow institutional and retail investors to enter a regulated market to trade crypto assets and create a base diversified range of products for broader exchange.
“The market potential is double the size of our U.S. counterparts,” Tongli Han, chief executive of Harvest Global Investments, told CNBC.
HKEX said the combined average daily turnover of the three VA Futures ETFs listed on the exchange reached 51.3 million Hong Kong dollars ($6.6 million) during the first quarter of 2024, up from HK$8.9 million of the previous year.
Furthermore, futures ETFs recorded net inflows of HK$529 million in the first quarter.
Harvest Global’s Han said he expects slow growth of crypto assets under management initially in Hong Kong, as many investors prefer to watch from the sidelines at first. But over time, he said he expects demand to increase.
Nexo’s Trenchev noted that the relatively small size of Hong Kong’s ETF market could mean it would take years for it to match “the $12.4 billion of net inflows of its US peers.”
CNBC asked HashKey what kind of regulation they would like to see on the back side scandals involving FTX and Binance.
“We set an example and then showed how crypto can be regulated reasonably and in a very user-friendly or industry-friendly way. Of course we would like the pace to be a little faster,” Heddy Tsang, CEO of HashKey Exchange told CNBC.
— CNBC’s Emily Chan and Yolande Chee contributed to this report.