HSBC Hong Kong, a subsidiary of one of the world's largest banking and financial services organizations, has recently added support for Bitcoin and Ethereum futures Exchange Traded Funds (ETFs).
This move expands access to digital asset derivatives in the flourishing Asian crypto hub. Jeff Feng, co-founder of Sei Labs, believes that ETFs deliver "simplicity and convenience" for newcomers to the crypto space.
As of Monday, HSBC Hong Kong customers are now able to trade ETFs that offer exposure to Bitcoin and Ethereum futures based on derivative contracts listed on commodity exchanges. These ETFs, treated as securities, were listed on HSBC Hong Kong's mobile app "Easy Invest."
HSBC Hong Kong has confirmed to Decrypt that the specific offerings are CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF. The news was initially reported by Chinese crypto journalist Colin Wu, who underscored that HSBC, the largest bank in Hong Kong, is the first lender in the region to grant its customers access to digital asset ETFs.
According to Jeff Feng, including ETFs on its investment platform provides HSBC Hong Kong investors with access to derivatives, which they might otherwise seek on unregulated exchanges. This new offering represents a clear opportunity for the bank to take the lead and fulfill a clearly identified customer need.
The CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF are managed by CSOP Asset Management. This firm listed the two products on the Hong Kong Stock Exchange in December of last year, marking the first time ETFs in Asia had tracked digital asset futures. Both ETFs invest in futures contracts trading on the Chicago Mercantile Exchange (CME), providing a straightforward way for investors to participate in the performance of Bitcoin and Ethereum.
Safer Path Through Regulatory ScrutinyDespite the strong demand for spot access to crypto among retail investors in Hong Kong, Feng noted that the demand for derivatives is equally high, if not higher. ETFs offer companies a way to provide crypto exposure without exposing themselves to regulatory risk in a rapidly evolving industry. Hong Kong's financial authorities have recently signaled a shift toward a more open stance on cryptocurrencies.
The regulatory scrutiny around centralized exchanges has led to caution in launching new platforms.
"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 stated. "It's much safer to do what's already been proven. There's a clear playbook."
In the United States, futures ETFs related to the performance of digital assets have become more common. Despite the U.S. Securities and Exchange Commission (SEC) not yet approving a spot-based Bitcoin ETF, ProShares' Bitcoin futures ETF was launched on the New York Stock Exchange in 2021.
"When you have simplicity, what you eventually will get is volume,” he said. "People will eventually speculate because it’s just so easy," Feng said.
According to Feng, the "simplicity and convenience" offered by ETFs make them an attractive option for retail traders, particularly compared to other derivatives like options, which require an understanding of more complex concepts.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
