In Hong Kong, crypto ETFs are struggling to grow among traditional financial products. OSL’s Executive Director Gary Tiu emphasized that the Hong Kong market generally lacks incentives for ETFs. Brokers are not interested in ETFs due to high commissions from structured products.
Is There a Bias Against Bitcoin and Ethereum?
Tiu cites this as a reason why ETFs are not widespread in the Hong Kong market. Although ETFs are accessible to anyone wanting to trade in the market, brokers do not prefer them due to low commission rates. This is a factor that hinders the growth of ETFs.
Tiu noted that there is still a bias against cryptocurrencies like Bitcoin and Ethereum in Hong Kong. Regulators and financial institutions consider these crypto ETFs to be in a high-risk category. This bias is another significant factor hindering the growth of Hong Kong crypto ETFs.
Chen Zhao, Director of Crypto Assets at Fosun Wealth, associated this with the small number of market participants in Hong Kong. Western and China-based financial institutions are not interested in or prefer not to trade these products. Hong Kong-based institutions are quite small compared to these two major groups.
The Future of Crypto ETFs in Hong Kong Remains Uncertain
In Hong Kong, crypto ETFs are struggling to grow with limited market participants and low incentives. As of August 11, these ETFs had a total net asset value of $310 million and an average daily trading volume of $2.8 million. However, unlike US crypto ETFs, transactions based on physical BTC in Hong Kong are not counted as cash inflows.
These challenges facing Hong Kong crypto ETFs stand as obstacles that need to be overcome for wider market acceptance. The market’s growth may be possible with changes in the perspectives of brokers and regulators towards these products.
