Asia's First Spot Bitcoin and Ether ETFs Launch in Hong Kong

Representations of the cryptocurrency Bitcoin are placed on a PC motherboard in this illustration taken on June 16, 2023.

Ruvik Dice | Reuters

Hong Kong launched six spot bitcoin and ether exchange-traded funds on Tuesday — the first in Asia to offer retail investors the ability to trade cryptocurrencies at spot prices.

The cryptocurrency ETFs were offered by three Chinese firms — China Asset Management, Posera Asset Management and Harvest Global Investments — on the Hong Kong exchange.

Hong Kong's Securities and Futures Commission (SFC) approved three ETF providers two weeks ago.

Spot bitcoin ETFs from ChinaAMC, Bosera HashKey and Harvest were up 3% in early trade, but have since given up some gains to trade 1.5% higher. Three ether ETFs traded up more than 1% in the morning, but fell into negative territory in the afternoon.

Bitcoin It was trading at $63,218 at 3:50 am ET Ether It traded at $3,159, according to Coin Metrics data.

Hong Kong is one of the first places in the world to recognize Ether ETFs. In January, the US Securities and Exchange Commission approved changes to allow the creation of Bitcoin ETFs in the US, but has yet to approve an Ether ETF.

Crypto ETFs allow investors to gain exposure to the price movement of the underlying asset without owning the asset directly.

The move is seen as positive for Hong Kong markets.

“There's a big game here: the launch of these new ETFs puts Hong Kong a step ahead of Singapore and Dubai, which are trying to position themselves as regulated hubs for digital assets,” said Antony Trenchev, co-founder of crypto exchange Nexo. told CNBC on Tuesday.

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“Everything in this game is a first mover advantage.”

Japan, Singapore and South Korea will be next with similar products in the next two years, Trenchev said.

Executives from Chinese asset managers debuted their ETFs on Hong Kong's 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 more diversified product platform. Broad Exchange.

“The market potential of our U.S. companies will double,” Dongli Han, CEO of Harvest Global Investments, told CNBC.

Faster startup, slower demand?

High Risks When Buying Spot Crypto ETFs With Cash: HashKey

Average daily turnover for the three VA futures ETFs listed on the exchange reached 51.3 million Hong Kong dollars ($6.6 million) in the first quarter of 2024, up from HK$8.9 million a year ago.

Additionally, futures ETFs saw net inflows of HK$529 million in the first quarter.

Harvest Global's Han said he expects slow growth of crypto assets under management in Hong Kong initially, 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 means it will be years before it “matches their US counterparts with net inflows of $12.4 billion”.

CNBC asked Hashke what kind of regulation he'd like to see behind Scandals involving FTX and Binance.

“We set the precedent and then we showed how we can regulate crypto reasonably and in a very user-friendly or industry-friendly way. Of course, we want the pace to go a little faster,” said executive director Hedi Chang. Haschke told CNBC the exchange.

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— CNBC's Emily Chan and Yolande Seay contributed to this report.

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