Despite ambitions to become a global digital asset center, crypto ETFs in Hong Kong are lagging behind their US counterparts due to outflows and market difficulties.
When compared to spot ETFs headquartered in the United States, which contain $55 billion in assets, crypto ETFs based in Hong Kong have underachieved. The debut of Hong Kong in the crypto ETF market was underwhelming, despite the early euphoria. The original investment in six Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong was $293 million, but according to Bloomberg, that amount dropped to $25 million.
U.S.-based spot ETFs have been quite successful, with a total of $55 billion in assets and a net inflow of $12.1 billion. This triumph exemplifies the difficulties Hong Kong encounters in its pursuit of crypto trading dominance over the United States.
The trade industry in Hong Kong is smaller and less robust than in the United States. The government was hoping that crypto ETFs would bring in more market makers and increase trading activity. By reestablishing itself as a thriving financial hub, the city hopes to compete with other major crypto centres such as Dubai and Singapore. Despite a restriction on cryptocurrency trading in mainland China, Beijing seems apathetic about Hong Kong’s crypto surge.
The head of trading at Auros, Le Shi, said that being behind the US and not knowing China’s position on crypto are the two key reasons for the lacklustre response of crypto ETFs in Hong Kong. Because of this, prospective investors are wary.
Neither did the April 30 local debuts by Harvest Global Investments and a consortium that included Bosera Asset Management and HashKey Capital. Mainland Chinese investors do not have access to these money, and when that will change is anyone’s guess.
Rebecca Sin, an ETF analyst with Bloomberg Intelligence, finds some encouraging trends. With a total of more than $250 million, there is room for expansion. Sin anticipates a surge in market activity from new issuers and predicts that the value of these ETFs will reach $1 billion in the next two years.
Crypto ETFs in Hong Kong have promise, despite a bumpy start. If the city can overcome its many problems, it will be able to become a major participant in the international digital asset market.
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