November 14, 2023
By Sharan Kaur Phillora
UBS Group AG has joined the ranks of financial institutions like HSBC Holdings Plc by permitting clients in Hong Kong to engage in trading certain crypto-linked exchange-traded funds (ETFs). This move aligns with Hong Kong’s efforts to establish itself as a digital asset hub.
Here’s what we know:
According to a confidential source, three crypto ETFs authorized by the Securities and Futures Commission (SFC) will become accessible to affluent clients through UBS’s Hong Kong platform, starting last Friday (10 November). The selected ETFs include the Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures ETFs. Clients will also have access to educational materials to gain a better understanding of associated risks. UBS has chosen not to provide an official comment on the matter.
Hong Kong introduced a comprehensive digital asset regulatory framework on June 1, aiming to safeguard investors’ interests and stimulate the growth of a digital asset hub. Under these regulations, the SFC permits retail investors to trade major tokens on licensed exchanges and is currently evaluating the feasibility of allowing spot crypto ETFs.
While Hong Kong’s ambition to become a financial technology leader has faced challenges, such as the recent issues with the unlicensed JPEX exchange and fraud allegations, the city has responded by tightening oversight of the crypto industry. A joint task force comprising the SFC and the police has been established to monitor suspicious activities.
The crypto sector is gradually recovering from the market downturn of 2022, which wiped out $1.5 trillion in value, along with notable collapses like the FTX platform’s bankruptcy. The anticipation of the U.S. potentially approving its first spot Bitcoin ETFs has contributed to the doubling of Bitcoin’s price this year.
Despite the overall cautious stance of global financial institutions regarding compliance risks associated with cryptocurrencies, signs of increasing engagement with the crypto economy are emerging. DBS Group Holdings Ltd. has expressed its intent to apply for a license to offer crypto services to Hong Kong customers. Additionally, ZA Bank Ltd., Hong Kong’s largest virtual bank, plans to facilitate token-to-fiat currency conversions on licensed platforms. SEBA Bank AG, backed by Julius Baer Group Ltd., has secured a license for its unit to offer crypto services in Hong Kong.
The CSOP Bitcoin Futures and CSOP Ether Futures funds, initially launched in December, were billed as Asia’s first listed Bitcoin and Ether futures ETFs. While the combined assets of these two funds and the Samsung vehicle stand at approximately $70 million, they reflect the subdued interest in crypto compared to the peak of the pandemic-era boom in the market.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.