HSBC Hong Kong customers can now trade Bitcoin and Ethereum futures Exchange Traded Funds (ETFs), broadening access to digital asset derivatives in the emerging Asia crypto hub.
The ETFs, which are traded as securities, were listed on HSBC Hong Kong’s so-called “Easy Invest” mobile app on Monday. They offer traders exposure to Bitcoin and Ethereum futures based on derivative contracts that trade on commodity exchanges.
The specific offerings are CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF, a representative from HSBC Hong Kong confirmed to Decrypt. The news was first reported by Chinese crypto journalist Colin Wu.
HSBC is the largest bank in Hong Kong, Wu said, and HSBC is the first lender in Hong Kong to allow its customers access to digital asset ETFs.
Adding ETFs to its investment platform offers HSBC Hong Kong investors access to derivatives, without which customers might seek out access on an unregulated exchange, possibly using a VPN, Sei Labs co-founder Jeff Feng told Decrypt.
“It’s a clear opportunity for [HSBC] to get ahead and offer this one product that is otherwise not allowed in Hong Kong,” he said, adding there’s a “clear customer need.”
The CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF are managed by CSOP Asset Management, a firm that saw the two products listed on the Hong Kong Stock Exchange in December of last year. The two ETFs were the first in Asia to track digital asset futures, according to the firm’s website.
Both ETFs invest in futures contracts that trade on the Chicago Mercantile Exchange (CME), making them an “easy transparent way for investors to capture the performance” of Bitcoin and Ethereum, according to CSOP Asset Management.
The Samsung Bitcoin Futures Active ETF is managed by Samsung Asset Management Hong Kong and invests in CME contracts as well, but launched in January of this year.
While there’s robust demand for spot access to crypto among retail investors in Hong Kong, Feng said that the demand for derivatives is equal, if not greater. And ETFs allow companies to offer exposure to crypto without opening themselves to regulatory risk in a nascent industry to which Hong Kong has only recently signaled openness.
“If all of the centralized exchanges are getting this much regulatory scrutiny, it wouldn’t be too wise to go out and try to launch another,” Feng said of crypto exchanges more generally. “It’s much safer to do what’s already been proven. There’s a clear playbook.”
Futures ETFs correlated to the performance of digital assets are nothing new in the United States. While the Securities and Exchange Commission (SEC) has not approved a spot-based Bitcoin ETF yet—BlackRock wants to change that—ProShares’ Bitcoin futures ETF launched on the New York Stock Exchange in 2021.
Feng said the “simplicity and convenience” of ETFs make them a much more palatable option for retail traders compared to other derivatives, such as options, where traders need to understand concepts like 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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