February 21, 2024

HSBC, a subsidiary of one of the world’s largest banking and financial services organizations, recently added support for bitcoin and ethereum futures exchange-traded funds (ETFs).

The move expands access to digital asset derivatives in the thriving Asian cryptocurrency hub. Sei Labs co-founder Jeff Feng believes that ETFs offer “simplicity and convenience” for newbies in the cryptocurrency space.

Broader exposure to digital assets

As of Monday, HSBC Hong Kong customers can now trade ETFs Derivatives contracts based on commodities exchanges listed provide exposure to Bitcoin and Ethereum futures. The ETFs are considered securities and are listed on HSBC Hong Kong’s mobile app “Easy Invest”.

HSBC Hong Kong has confirmed to Decrypt that the specific products are CSOP Bitcoin Futures ETFSouthern Oriental Ethereum Futures ETFs, and Samsung Bitcoin Futures Active ETF. The news was first reported by Chinese cryptocurrency journalist Colin Wu, who highlighted that HSBC, the largest bank in Hong Kong, is the first in the region to offer digital asset ETFs to clients.

Adding ETFs to its investment platform provides HSBC Hong Kong investors with access to derivatives they might otherwise seek on an unregulated exchange, Jeff Feng said. This new offering presents a clear opportunity for banks to take the lead and address clearly identified customer needs.

CSOP Bitcoin Futures ETF and CSOP Ethereum Futures ETF are managed by CSOP Asset Management. The company listed the two products on the Hong Kong Stock Exchange in December, the first ETF in Asia to track digital asset futures.Both ETFs invest in Chicago Mercantile Exchange (CME)providing a direct way for investors to participate in the performance of Bitcoin and Ethereum.

A safer path through regulatory scrutiny

While retail investors in Hong Kong have strong demand for spot cryptocurrencies, Fung noted that demand for derivatives is equally high, if not higher. ETFs provide a way for companies to offer investments in cryptocurrencies without the regulatory risks of a fast-growing industry. Hong Kong’s financial authority recently indicated that it will take a more open stance towards cryptocurrencies.

Regulatory scrutiny surrounding centralized exchanges has led to caution when launching new platforms.

“If all centralized exchanges are under so much regulatory scrutiny, it’s not very wise to go out and try to launch another exchange,” Feng said. “It’s much safer to do something that’s already been proven. There’s a clear playbook .”

In the U.S., futures ETFs tied to the performance of digital assets have become more common.Although the U.S. Securities and Exchange Commission (SEC) has not yet Spot-Based Bitcoin ETF ApprovedProShares’ bitcoin futures ETF to launch on the New York Stock Exchange in 2021.

“When you go simple, what you end up with is volume,” he said. “People end up guessing because it’s so simple,” Feng said.

Feng said the “simplicity and convenience” offered by ETFs make them an attractive option for retail traders, especially compared to other derivatives such as options, which require understanding more complex concepts.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.