Kraken’s subsidiary is a quiet giant in Bitcoin ETF growth: Bloomberg

Source: Crypto Briefing

Kraken’s subsidiary, CF Benchmarks, is a quiet major player in the growing popularity of Bitcoin exchange-traded funds (ETFs), Bloomberg reported on Friday. The company provides benchmark indexes for roughly $24 billion worth of crypto ETFs, including BlackRock’s US-based Bitcoin ETF and all six of the newly launched Bitcoin and Ethereum ETFs in Hong Kong.

CF Benchmarks operates by licensing its data to ETF providers, with fees that scale with the ETF’s investor base. The company claims it holds about half of the crypto benchmarking market. This dominance has placed CF Benchmarks at the heart of Bitcoin ETF growth, especially with the successful introduction of spot Bitcoin ETFs in the US, which has led to increased revenue streams for the firm.

CF Benchmarks CEO, Sui Chung, reported that assets for US spot-Bitcoin ETFs utilizing CF Benchmarks’ indexes have exceeded expectations, reaching more than four times the anticipated $5 billion this year. He also predicted that Hong Kong products would manage up to $1 billion by the end of 2024.

Chung anticipates CF Benchmarks’ revenue to increase significantly this year and plans to expand their workforce by a third. The company is also setting its sights on new markets, including South Korea and Israel, where there is a strong affinity for digital assets and ETFs.

“South Korea is a market where ETFs have become the wrapper of choice for long-term savings,” Chung said. “It is also a market where digital assets have gained a high degree of adoption.”

From the US decline to Hong Kong’s modest start

While the launch of US spot Bitcoin ETFs initially drove Bitcoin’s price to a record high in March 2024, the price has faltered as investor demand for the funds has cooled. Bitcoin ETFs in the US witnessed their largest daily outflow on Wednesday, with assets under management closing at approximately $47 billion.

Meanwhile, Hong Kong’s debut of spot crypto ETFs was not particularly strong. On March 2, the second day of trading, Hong Kong’s three bitcoin exchange-traded funds saw inflows of $10.3 million, based on data from SoSoValue. This figure was considerably lower compared to the first trading day, with $240 million in inflows. Trading volume on both days reached $9.7 million.

However, these Hong Kong-listed spot Bitcoin funds currently hold around $238 million BTC in assets under management.

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Author: Vivian Nguyen