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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 United States in the race to dominate a fast-growing market.
The rollout follows the launch of similar products in the United States by the likes of BlackRock and Fidelity Investments in January, which attracted billions of dollars in investment and helped drive the price of Bitcoin to a record high of $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 tracking the prices of bitcoin and ether. Bosera funds were launched in partnership with HashKey Capital.
The three Bitcoin ETFs each closed between 1.5 percent and 1.8 percent higher in their debut, while the ether ETFs lost between 0.5 percent and 0.8 percent. The total trading volume across the six ETFs – including transactions in US dollars, Hong Kong dollars and renminbi – was approximately HK$99.5 million (US$12.7 million). ). The turnover on the first day of trading of American funds exceeded $4 billion.
Hong Kong has announced plans to become a cryptocurrency hub in 2022 after years of pandemic-related restrictions and Beijing’s tightening grip on the city 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. . . confirming Hong Kong’s leading position in Asia in the development of crypto assets,” Joseph Chan, Hong Kong’s Undersecretary for Financial Services and Treasury, said 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 United States Securities and Exchange Commission approved the country’s first spot Bitcoin ETFs. BlackRock’s iShares Bitcoin Trust manages more than $17 billion in assets, according to Bloomberg data, supported 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 generated about $12 billion in total net inflows since their launch, according to London-based Farside Investors.
Robert Zhan, director of risk consulting at KPMG China, said the most optimistic forecast predicted that Hong Kong funds would attract more than $3 billion in net inflows.
But Zhan added that the relatively stable prices of ether and bitcoin before the ETF’s launch suggested the targets might be unrealistic given current market sentiment. The prices of bitcoin and ether each fell about 1% in the hour after the funds were listed Tuesday morning.
Yet the launch of cryptocurrency-related funds by three of China’s largest asset managers has sparked enthusiasm within the sector, despite Beijing’s strict cryptocurrency rules and warnings from Chinese authorities and state media against the trading of digital assets.
China banned all cryptocurrency trading in 2021, but a significant number of investors continue to trade the coins using workarounds 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 be aimed at active investors who are unable or unwilling to trade during hours opening of the United States.
