Hong Kong Launches Crypto Futures ETFs

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In spite of the market’s collapse, two exchange-traded funds (ETF) that track U.S.-listed cryptocurrency futures have raised a total of $73.6 million in advance of their debut on the Hong Kong stock exchange on Friday.

After months of instability, the cryptocurrency industry was dealt another blow when the crypto exchange FTX went bankrupt. Since its all-time high in November 2021, Bitcoin, the largest cryptocurrency, has seen its value drop by over 70%.

The CSOP Asset Management-managed ETFs are the only cryptocurrency assets approved by the Hong Kong Securities and Futures Commission. And they invest exclusively in bitcoin and ethereum futures traded on the CME exchange in the United States.

The manager claims that the CSOP Bitcoin Futures ETF (3066. HK) collected $53.9 million. That was higher than the $20 million seed capital used by the ProShares Bitcoin Strategy ETF, the first U.S. bitcoin futures exchange-traded fund, when it launched on the NYSE Arca exchange in October 2021.

Yi Wang from CSOP commented that their two crypto futures ETFs show that Hong Kong was still optimistic about the future of virtual assets, despite the recent liquidity issues that have plagued some crypto platforms. 

A consultation by the SFC to allow investors to trade cryptocurrencies and ETFs was set to begin in October, just before FTX’s collapse last month. The authority advocated that only qualified investors be allowed to take part.

According to Wang, there are stronger regulatory protections for investors in ETFs than in tokens traded on unregulated platforms because the ETFs do not invest in actual bitcoin and are listed on regulated U.S. and Hong Kong exchanges.

Lots traded on the Hong Kong Exchanges & Clearing (HKEX) (0388. HK) will begin trading at a price of HK$780 on Friday.

According to the product document submitted to the HKEX by the ETFs, the price of bitcoin may be prone to manipulation as a large share is held by a small number of individuals, and the CME futures could go to zero.

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