Hong Kong’s crypto EFTs post merely $11 million in trading volume

Hong Kong is opening up new possibilities for Chinese investors with the launch of spot crypto exchange-traded funds (ETFs) on their stock market.

Starting April 30, these ETFs will focus on Bitcoin and Ether and are initially available only to Hong Kong residents.

Yimei Li, CEO of China Asset Management—one of the three companies issuing these ETFs—told Bloomberg that these ETFs offer a fresh investment opportunity for mainland Chinese investors with RMB. This could eventually allow Chinese investors to participate in the future despite the ongoing ban on crypto trading in mainland.

The anticipation surrounding the ETFs was heightened by speculations from industry players like Matrixport, which suggested demand from Chinese investors could reach $25 billion. However, a recent report by Wu Blockchain indicated that “southbound funds”—investments from mainland China—would be restricted from accessing these ETFs.

China, which banned the trading and mining of cryptocurrencies in 2021, remains one of the world’s most restrictive countries regarding digital assets.

Alongside China Asset Management, Harvest Global Investments and Bosera Asset Management are also rolling out crypto products on the Hong Kong Stock Exchange. Han Tongli, CEO of Harvest Global, pointed out that regulators are closely monitoring these ETFs to address any risks before possibly opening up the market further.

The much-hyped launch of Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) in Hong Kong didn’t quite hit the mark on their first day of trading, pulling in just $11 million combined. This was way below the expected $100 million, with Bitcoin ETFs making up $8.5 million of that and Ether ETFs at $2.5 million.

Unlike in the U.S., where there’s ongoing uncertainty about Ether’s status as a security, Hong Kong’s regulators are more open, allowing these ETFs to go ahead without the same legal headaches. However, Canada has been ahead of the curve with Ether ETFs available in Toronto through companies like Evolve and Purpose Investments.