A new variety of crypto-focused products are now available, but is the market ready?

On April 19th the world welcomed one of crypto’s biggest milestones, the Bitcoin halving. The highly followed event once again placed the crypto industry on the radar of traditional finance investors. The lowering of the mining reward from 6.25 BTC per block to 3.125 BTC carries far-reaching implications not only for the crypto mining industry but also for investors eyeing to make bets on the future growth of crypto. Asia’s financial hub is making crypto investing easier than ever.

Hong Kong is supporting a vibrant ground for crypto-related investments shortly after it introduced Asia’s first Bitcoin spot ETFs. Three Chinese-background asset managers: Harvest Global Investments Ltd., Bosera Asset Management (International) Co. Ltd., and China Asset Management (Hong Kong) Ltd., were granted permission to launch Bitcoin ETF products on April 15th this year.

The unique feature of Hong Kong Bitcoin spot ETFs, compared to the ones launched in the U.S., lies in the structure. The in-kind subscription model in Hong Kong allows crypto investors to buy ETF shares with Bitcoin. This flexible option offers an attractive path for investors to easily gain crypto exposure with more managed risk and compliance at its core. Investors are able to access crypto ETFs with leading securities firms such as Victory Securities and others.

Hong Kong ETFs are only the start of the city’s push to build a Web3 hub, and more products are expected to be ushered into the market. With the spot BTC and ETH ETF products beginning to enter the mainstream, traditional finance investors are having a pause for thought about how to allocate to this particular asset class. We are already seeing hedge funds and family office investors begin to allocate 1-10% of their AUM into the asset class.

There has always been a strong interest from major banks for tokenization and blockchain technology. Despite regulatory hurdles preventing most banks from dealing directly with crypto assets, they are exploring partnerships with licensed and regulated crypto exchanges to serve their existing client base. So far, we’re seeing this trend set to continue. Tokenization is reaching new heights, as boasted by the recent HSBC gold token launch, and the plethora of bond tokenization and stablecoin projects backed by UST Bills, for example.

The growing sector of the crypto industry focused on tokenization and crypto-focused ETFs has been encouraging. Tokenization projects are being embraced by traditional finance institutions as a way to promote products using blockchain technology, while crypto-focused funds offer retail investors to gain exposure in a familiar yet secure way. Retail investors now have more options and tools than ever to explore the best in the crypto space. Time to get started.

Yiwei Wang is an avid blockchain enthusiast with a focus on the intersection of crypto, economics, and public policy. He was previously the Global PR Lead at Babel Finance and he began his career at Ogilvy in Beijing. He is currently the Head of Global PR at Metalpha.

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Hong Kong Bitcoin spot ETF: Innovation designed for retail investors