Hong Kong Launches Two New ETFs, Expanding Its Product Ecosystem

Today, Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of two new ETFs. Giving Hong Kong and foreign investors even more options will be Asia’s first crypto asset ETFs. Additionally, it will further extend its product ecosystem.

CSOP Bitcoin Futures ETF and the CSOP Ether Futures ETF are two new ETFs. Both follow the standardized, cash-settled bitcoin futures contracts and ether futures contracts traded on CME, which CSOP Asset Management Limited manages.

These ETFs listed today are an exciting addition to Hong Kong’s expanding and varied ETP ecosystem, said HKEX C00 Wilfred Yiu. He added they represent their continued commitment to and the market’s desire for the digital economy. In addition, it gives investors access to the digital asset area for the first time in Asia.

He further said:

We look forward to welcoming more themed ETFs and more digital asset products to our markets in the months ahead.

One of the fastest-growing sectors in HKEx is ETFs. Due to the introduction of new products and rapidly changing world markets, 2022 will see a lot of changes coming to this sector. Such as the first metaverse ETF, blockchain ETF, and carbon futures ETF.

Furthermore, the average number of shares traded daily in HKEX Exchange Traded Products (ETPs) has increased substantially since last year. As of Nov. 2022, there are 168 ETPs listing and trading, with an estimated market cap value of about $373.5 billion.

ETFs Growing Demand

After amassing about $79M in initial investment, the ETFs briefly gained on their launch. Before listing, CSOP Asset Management’s BTC futures and ETH futures ETFs raised $58.9M and $19.7M, respectively.

Investors in the city now have access to CME futures contracts for crypto due to ETFs. The launch, which comes amid the failure of Sam Bankman-Fried’s exchange FTX, falling prices for digital assets, and indications of trouble throughout the industry, is a key part of Hong Kong’s strategy to establish itself as a global center for cryptocurrencies.

Following the collapse of FTX, a number of well-known Asian crypto companies have already encountered difficulties. Hong Kong exchange AAX has stopped accepting withdrawals, while Singaporean lender Amber has halted development plans.

Genesis Block, a cash-for-crypto business located in Hong Kong, ceased taking deposits and shut down its trading platform last month. Alameda Ventures, a subsidiary of FTX, also held a portion of Genesis. Both ETFs began trading on Friday at HK$7.77 ($1) per unit and ended the day 0.5% higher.

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The initial $79 million raised was less than anticipated, according to Carlton Lai, director of blockchain and crypto research at Daiwa Capital Markets in Hong Kong. It clearly illustrates the present bear market and lack of trust in the asset class, he continued.

The drive in Hong Kong to introduce cryptocurrency exchange-traded funds and simplify the trading process for individual investors. After years of tougher requirements than in Singapore, a rival financial center, it now exists. However, the company has declared its intention to crack down harder on unethical behavior in the sector.