Amid Crypto Turmoil, Hong Kong Launches First Crypto Futures ETFs

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By Georgina Lee

HONG KONG (Reuters) Two exchange-traded funds (ETFs) that track U.S.-listed cryptocurrency futures raised a total of $73.6 million ahead of their debut on the Hong Kong stock exchange on Friday in contempt for collapsing sectors.

Cryptocurrencies have endured months of turbulence, with the collapse of crypto exchange FTX being the latest blow to the sector. Bitcoin, the largest cryptocurrency, has lost more than 70% of its value since hitting an all-time high in November 2021.

The ETFs, managed by CSOP Asset Management, invest in bitcoin and ether futures contracts listed on the CME exchange in the United States, the only cryptocurrency assets currently authorized by the Hong Kong Securities and Futures Commission (SFC).

The larger of the two, CSOP Bitcoin Futures ETF, brought in $53.9 million, according to the manager. This surpassed ProShares Bitcoin Strategy ETF, the first US bitcoin futures ETF that debuted on the NYSE Arca exchange in October 2021 with $20 million in seed capital, according to media reports.

After the recent liquidity issues affecting some of the crypto platforms, our two crypto futures ETFs demonstrate that Hong Kong remains open-minded about the development of virtual assets, said Yi Wang, Head of Quantitative Investments at CSOP.

Just before the FTX collapse last month, the SFC announced in October that it would launch a consultation to allow retail investors to trade cryptocurrencies and ETFs. The regulator initially proposed restricting participation to professional investors.

As ETFs do not invest in physical bitcoin and are traded on regulated exchanges in the United States and Hong Kong, there are more regulatory safeguards for investors compared to tokens traded on unregulated platforms, Wang said. .

On Friday, each lot traded on the Hong Kong Exchanges & Clearing (HKEX) will start at HK$780 each.

The bitcoin price may be subject to manipulation as a large share is held by a small number of holders and CME futures could drop to zero, according to the ETF product document filed with the HKEX.

(Reporting by Georgina Lee; Editing by Mark Potter)

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