According to Reuters, two ETFs tracking cryptocurrency futures raised $73.6 million in total before their debut on Hong Kong’s stock exchange on Friday. The larger one raised $53.9 million. According to Reuters, the launch was in direct contravention of ongoing turmoil in the sector.
The funds are offered by CSOP Asset Management and invest in bitcoin ( Bitcoin) and ether( ETH_) futures that are listed on the CME exchange in America. These assets are the only ones allowed by Hong Kong’s Securities and Futures Commission. Yi Wang, head for quantitative investment at CSOP commented on the developments:
Our two crypto futures ETFs, which were created in response to recent liquidity issues affecting crypto platforms, show that Hong Kong is open-minded about the development of virtual assets.
The crypto market slump of this year led to a substantial drop in prices for major cryptocurrencies, with BTC being the largest by capitalization. It lost more than 70% since its peak a little over one year ago.
A string of industry failures accompanied the rate slide. The latest was the collapse at FTX, a major crypto exchange with global reach. FTX declared bankruptcy in November amid liquidity problems.
The SFC launched a consultation in October about whether retail investors should be allowed to trade ETFs and cryptocurrencies, weeks before the crash. Initial proposal by the watchdog was to restrict participation to professional investors.
In November, Julia Leung, the Commission’s Deputy Chief Executive Officer, was quoted as stating that the SFC is “actively looking” to create a regulatory framework that would permit trading in crypto futures exchange traded funds.
Yi Wang explained that ETFs don’t invest in bitcoin and can be traded on regulated U.S. or Hong Kong exchanges. This means there are greater regulatory safeguards for investors than tokens traded on unregulated platforms.