On Tuesday, six new ETFs based on Bitcoin and Ethereum products were listed on the Hong Kong Exchange, bypassing the need to purchase and store these virtual currencies. The move is seen as an important first step towards the acceptance of cryptocurrencies by the international financial market and regulatory authorities. These FSTs reached $11.2 million while minting a trading volume of over HK$87.5 million by the time of their debut. This starting point marks a new entry point for investors to the openly accessible CFD market through the traditional financial markets.
Managed by China Asset Management (HK) Ltd, Harvest Global Investment, Bosera Asset Management, and HashKey Digital Asset Group, these ETFs allow investors to invest in Bitcoin and Ethereum directly. Among all of them, the China Asset Management Bitcoin ETF placed a trading volume of HK$37.16 million and achieved the highest level. During this period, the Hong Kong dollar equivalent of Ether closed at HK$12.66 million, while the Ether volume hit nearly the same amount. Such monetary resources give participants a legal option to combine the advantages of cryptocurrency and supervision.
The same products showed the opposite behavior when they were launched in the United States, where 11 Bitcoin ETFs had over $4.6 billion in volume in one day in January. Although smaller than in Hong Kong, the industry became convinced that the launch of ETFs has had a corresponding demand. This is given the fundamentally different market dynamics in terms of the sizes of the markets and the qualities of the investors’ bases.
New crypto ETFs surge on Hong Kong market
On the first trading day, the end was set for the China Asset Management Bitcoin ETF. The market capitalization of the fund as of the end of the trading session was $121.7M. It is a nascent ETF, and its ether ETF raised $20.4 million in AUM. These numbers bring substantial trust in a very short time as a start to the investor relationship within the region.
Besides, members of the new crypto market segment like Harvest Global, who gained HK$17.89M in trade of their Bitcoin ETF, and another ETF of theirs for Ether that had HK$4.95M, were the players. One of the news pieces that has drawn special attention lately is the Bitcoin ETF and Ether ETF proposed by Bosera HashKey. They had a little over HK$12.44 million and HK$2.48 million on each one of them when it came to the associated volume in the last trade. The numbers illustrate the relatively atypical demand for the stock market investors towards the different funds available in light of the existing varying investment styles.
In this regard, exchange operators and figures like Livio Weng, CEO of HashKey Exchange, have mentioned ongoing discussions with regulators to eventually reward these ETF stakers. Risk control and assessment procedures have slowed the deployment of these stripers, which might attract investors as the staking mechanism gives them some returns.
Hong Kong crypto ETFs lack staking rewards
While the launch was enthusiastically received, it also showcased that the regulatory measures needed to be in place and the market needed to be expanded. For instance, the current shortage of staking rewards in Ether ETFs, which typically pay around a 4% annual percentage rate, might affect prospective investors in the long term. Therefore, it is still under consideration as fund issuers manage to engage regulators in responding to the risks and benefits that they possess.
Justin d’ Anethan, APAC Business Development head at crypto market maker Keyrock, made his comment on the market after the event. He mentioned that pre-listing trading volumes could show a substantial decline compared to the volumes of US stock markets. However, they still indicate a growing acceptance of such financial products by Hong Kong investors. This reception received special attention, given that most of the market participants were investors, mainly from mainland China.
