Despite regulatory clarity, Hong Kong crypto ETFs experience lukewarm demand

The daily trading volume of all Hong Kong crypto exchange-traded funds averaged about $1.19 million between December and early February.

According to a report published by the Hong Kong Stock Exchange (HKSE), two Bitcoin (BTC) exchange-traded funds (ETF) and an Ethereum (ETH) ETF listed on HKSE averaged 9.30 million Hong Kong dollars ($1.19 million) in daily trading volume from Dec. 16, 2022, to Feb. 7, 2023. As the first region in Asia to provide such access to crypto ETF products, Hong Kong exchange operators praised regulator clarity for its role in “seizing opportunities in virtual asset development.”

However, the numbers appear somewhat lukewarm when viewed in a global context. On Apr. 17, Cointelegraph reported that Bitcoin and Ether futures and options listed on the United States-based CME Group surpassed $3 billion in daily average notional value. Similarly, the ProShares Bitcoin Strategy ETF listed on NYSE Arca has an average daily volume of approximately $196 million.

Interestingly, unlike Hong Kong, the U.S. lacks regulatory clarity regarding crypto ETFs. While the U.S. Securities and Exchange Commission has approved futures-based Bitcoin ETFs, such as the ProShares Bitcoin ETF, it has denied the conversion of Grayscale Bitcoin Investment Trust (GBTC), the largest over-the-counter Bitcoin fund in the country, to a listed spot ETF. Similarly, the Commission denied the listing application of Ark Investment Management’s ARK21 Shares Bitcoin ETF. 

One of the Bitcoin ETFs included in the HKSE report is that of the Samsung Bitcoin Futures Active ETF, created by the investment management arm of the South Korean conglomerate. The product is designed to satisfy the needs of institutional investors who want to trade Bitcoin futures while in an Asia-Pacific time zone.

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