In a landmark move, Hong Kong has launched the first spot Bitcoin (BTC) and Ether (ETH) exchange traded funds (“ETFs”) in Asia on 30 April 2024, allowing retail investors to gain exposure to the cryptocurrencies. The six ETFs were issued by three Chinese firms – China Asset Management, Bosera Asset Management, and Harvest Global Investments – and listed on the Hong Kong Stock Exchange.
The debut of these cryptocurrency ETFs is seen as a significant development for the region’s crypto market. Crypto ETFs allow investors to gain exposure to the price movement of the underlying assets without having to own the assets directly. This makes it more accessible for investors in the traditional finance (or TradFi) markets to participate in the crypto space.
Hong Kong’s Securities and Futures Commission approved the three ETF providers just two weeks ago before the launch, making the city one of the first places in the world to approve an Ether ETF. In contrast, the U.S. Securities and Exchange Commission has yet to approve any Ether ETF, despite allowing the creation of Bitcoin ETFs earlier this year.
“There’s a bigger game at play here: The launch of these new ETFs puts Hong Kong one step ahead of Singapore and Dubai who are also trying to establish themselves as regulated hubs for digital assets,” said Antoni Trenchev, co-founder of crypto exchange Nexo.
Hong Kong Exchanges and Clearing Limited has observed investor’s increasing interest in VA ETFs. The VA futures ETFs, which began trading on the exchange in late 2022, have seen their average daily turnover steadily increase to HK$51.3 million (US$6.6 million) in the first quarter of 2024. The three Bitcoin ETFs and three Ether ETFs saw healthy trading volumes (totalling HK$87.5 million or US$11.2 million) on their debut day, with the Bitcoin products rising over 3% and the Ether funds climbing more than 1% in early trading.
While the launch of these ETFs is a significant milestone, the question remains as to how strong demand is in the region for these products. Tongli Han, CEO of Harvest Global Investments, expects slow initial growth, as many investors may prefer to “watch from the sidelines” at first. He believes that over time, however, demand will pick up as investors become more comfortable with the products.
The debut of these spot crypto ETFs in Hong Kong marks an important step in the mainstream adoption of digital assets. It provides investors with a regulated and accessible way to gain exposure to the cryptocurrency market, potentially attracting more capital and driving further development of the regional crypto ecosystem.
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