Bitcoin
Hong Kong joins global crypto ETF rush
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Hong Kong’s first spot cryptocurrency exchange-traded funds began trading on Tuesday, as the Asian financial hub takes on the US in the race to dominate the booming market.
The launch follows the launch of similar products in the US by groups such as BlackRock and Fidelity Investments in January, which attracted billions of dollars in investment and helped push the price of bitcoin to a record high of more than $73,000 in March.
The Hong Kong units of three mainland Chinese asset managers – Bosera Asset Management, Harvest Global Investments and China Asset Management – have each launched two ETFs that track the prices of bitcoin and ether. Bosera funds were launched in partnership with HashKey Capital.
The three bitcoins ETFs each closed between 1.5% and 1.8% higher on their debut, while ether ETFs lost between 0.5% and 0.8%. The total trading volume of the six ETFs – including trades in US dollars, Hong Kong dollars and renminbi – was about 99.5 million Hong Kong dollars (12.7 million dollars). Trading volume on the first day of trading for US funds exceeded $4 billion.
Hong Kong announced its efforts to become a cryptocurrency center in 2022, after years of pandemic restrictions and Beijing’s tightening control over the city have tarnished its image as a global financial hub.
“This is the first time that virtual asset spot products have been launched in the Asian market. . . verifying Hong Kong’s leading position in Asia in the development of crypto assets,” said Joseph Chan, Hong Kong’s Undersecretary for Financial Services and Treasury, at a listing ceremony for the six funds on Tuesday morning.
CSOP Asset Management launched Hong Kong’s first bitcoin and ether futures ETFs in late 2022, while the Securities and Futures Commission published rules for spot ETFs in December.
In January, the US Securities and Exchange Commission approved the country’s first spot bitcoin ETFs. BlackRock’s iShares Bitcoin Trust has more than $17 billion in assets under management, according to Bloomberg data, driven by billions of dollars in net inflows and sharp gains in digital asset prices this year.
The 11 U.S.-based bitcoin spot ETFs have attracted about $12 billion in total net inflows since their launch, according to London-based Farside Investors.
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Robert Zhan, director of risk consulting at KPMG China, said the most optimistic forecasts expect Hong Kong funds to attract more than $3 billion in net inflows.
But Zhan added that the relatively stable prices of ether and bitcoin ahead of the ETF’s launch suggested the targets may be unrealistic given current market sentiments. The price of bitcoin and ether fell about 1% each in the hour following the funds’ listing on Tuesday morning.
Still, the launch of cryptocurrency-linked funds by three of China’s biggest traditional asset managers has generated excitement in the industry, despite Beijing’s strict cryptocurrency rules and warnings from mainland authorities and state media against trading in digital assets. .
China banned all cryptocurrency trading in 2021, but a substantial number of investors still trade the coins using alternative solutions such as virtual private networks.
Donald Day, chief operating officer of Hong Kong-based digital asset exchange VDX and a former regulator of the city’s SFC, said the funds could serve active investors who can’t or don’t want to trade during U.S. opening hours.