HSBC goes crypto too:
HSBC Hong Kong has embraced the world of cryptocurrencies by offering support for Bitcoin and Ethereum Exchange Traded Funds (ETFs). This move aims to broaden accessibility to digital asset derivatives in the emerging Asia crypto hub, as the largest bank in Hong Kong takes the lead in allowing its customers to trade these ETFs through its "Easy Invest" mobile app.
The newly listed ETFs, treated as securities, provide traders with exposure to Bitcoin and Ethereum futures based on derivative contracts traded on commodity exchanges. The specific offerings available on HSBC Hong Kong's platform include the CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF, as confirmed by a representative from the bank. The news was initially reported by Colin Wu, a Chinese crypto journalist.
By adding ETFs to its investment platform, HSBC Hong Kong offers its investors access to derivatives that eliminate the need for seeking unregulated exchanges, potentially requiring the use of a VPN. According to Jeff Feng, co-founder of Sei Labs, this move presents a unique opportunity for HSBC to stay ahead of the game and address a clear customer demand.
The CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF, managed by CSOP Asset Management, were the first digital asset futures-tracking ETFs to be listed on the Hong Kong Stock Exchange in December of the previous year. These ETFs invest in futures contracts traded on the Chicago Mercantile Exchange (CME), providing investors with a transparent and straightforward method to capture the performance of Bitcoin and Ethereum, as described by CSOP Asset Management on their website. Another ETF available is the Samsung Bitcoin Futures Active ETF, managed by Samsung Asset Management Hong Kong, which also invests in CME contracts but launched in January of the current year.
While the demand for spot access to cryptocurrencies among retail investors in Hong Kong is significant, Jeff Feng emphasizes that the demand for derivatives is just as strong, if not greater. ETFs allow companies to offer exposure to cryptocurrencies without exposing themselves to regulatory risks in an industry that Hong Kong has only recently shown openness towards.
The concept of futures ETFs correlated to the performance of digital assets is not new in the United States. Although the Securities and Exchange Commission (SEC) has yet to approve a spot-based Bitcoin ETF, ProShares' Bitcoin futures ETF was successfully launched on the New York Stock Exchange in 2021. Jeff Feng highlights the appeal of ETFs, stating that their simplicity and convenience make them a more attractive option for retail traders compared to other derivatives like options, which require understanding complex concepts such as strike prices and gamma.
“When you have simplicity, what you eventually will get is volume,” he said. “People will eventually speculate because it’s just so easy.”
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