HSBC Hong Kong starts Bitcoin and Ethereum futures ETFs

Updated: 28 June 2023

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HSBC Hong Kong has initiated support for trading Bitcoin and Ethereum futures Exchange Traded Funds (ETFs), according to a recent announcement. This move expands opportunities for local customers to participate in digital asset derivatives, underscoring the importance of Hong Kong in the rapidly evolving Asian cryptocurrency landscape.

On Monday, the bank added these ETFs to its user-friendly mobile application “Easy Invest.” The derivatives-based ETFs provide traders with the chance to engage with Bitcoin and Ethereum futures that are traded on commodity exchanges.

HSBC Hong Kong has confirmed that it will offer three specific products: CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF. These additions were initially covered by Chinese cryptocurrency journalist Colin Wu.

A clear customer need

Regarded as Hong Kong’s biggest bank, HSBC is the pioneer among the city’s financial institutions in granting customers access to digital asset ETFs. As per Jeff Feng, Co-founder of Sei Labs, including ETFs in HSBC Hong Kong’s investment platform can help prevent clients from resorting to an unregulated exchange, possibly through a VPN. He sees it as a strategic opportunity for HSBC to meet a “clear customer need” and maintain a competitive edge in an area not typically permitted in Hong Kong.

The CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF, which debuted on the Hong Kong Stock Exchange in December of the previous year, are managed by CSOP Asset Management. As per the company’s website, these two ETFs were the inaugural ones in Asia to track digital asset futures. Investing in futures contracts from the Chicago Mercantile Exchange (CME), these ETFs offer a straightforward and transparent method for investors to tap into the performance of Bitcoin and Ethereum.

Market Shows a Great Interest in Crypto Derivatives

The Samsung Bitcoin Futures Active ETF, launched in January this year, is also invested in CME contracts. This product is managed by Samsung Asset Management Hong Kong.

Despite the strong interest in spot access to cryptocurrency from retail investors in Hong Kong, Feng asserted that the desire for derivatives matches or even surpasses this demand. He pointed out that ETFs are a means for firms to provide access to cryptocurrency without exposing themselves to regulatory risks in a nascent industry that Hong Kong has only recently begun to welcome.

While futures ETFs related to digital asset performance are commonplace in the US, the Securities and Exchange Commission (SEC) has yet to approve a spot-based Bitcoin ETF. However, companies like BlackRock are attempting to alter this. For instance, ProShares’ Bitcoin futures ETF was introduced to the New York Stock Exchange in 2021.

According to Feng, the appeal of ETFs lies in their “simplicity and convenience,” making them a far more attractive option for retail traders compared to other derivatives that require an understanding of complex notions like strike prices and gamma. He believes that this simplicity will ultimately lead to greater trading volume and speculation.