The Hong Kong-based financial company Venture Smart Financial Holdings Limited (VSFG) is getting ready to launch a bitcoin exchange-traded fund (ETF) in the first quarter of this year. Bloomberg reports state that the company’s lofty objective is to have $500 million in holdings under management by year’s end. Even though VSFG was the first virtual asset manager in Hong Kong to be approved, the Securities and Futures Commission (SFC), the city’s monetary regulator, required a long time to process VSFG’s application for an ETF.
SFC Releases Comprehensive Circulars for ETFs
The SFC signaled its willingness to consider applications for spot cryptocurrency exchange-traded funds (ETFs) in December by releasing two circulars that outlined the required steps for setting up these financial instruments. To restore its position as Asia’s cryptocurrency powerhouse, Hong Kong unveiled its crypto licensing mechanism for crypto trading platforms in June 2023. Furthermore, three cryptocurrency futures exchange-traded funds (ETFs) are now listed in Hong Kong. They are respectively CSOP Ether Futures, Samsung Bitcoin BTC -1.98% Futures, and CSOP Bitcoin Futures. The Chief Operating Officer (COO) of HashKey, a cryptocurrency exchange based in Hong Kong, Livio Weng, disclosed that earlier this month, about ten local fund providers began to inquire about the feasibility of introducing spot crypto ETFs.
U.S. Spot Bitcoin ETFs Shaking Up Wall Street
The U.S. Securities and Exchange Commission approved spot bitcoin ETFs on January 10th. Since then, their combined trading volumes have surpassed $13 billion. But after this permission, the initial excitement has subsided. At the time of writing, the price of Bitcoin has dropped to about $42K. The future of Bitcoin ETFs was alluded to by Catherine Clay, the global manager of derivatives at Cboe Global Markets, who hinted that options might be crucial to this rapidly expanding sector.
Clay emphasized the advantages of options in a special interview on CNBC’s “ETF Edge,” stressing its function in offering downside protection and clearly defined exposure to risks in the volatile world of Bitcoin. The largest options exchange in the United States, Cboe, bravely filed options related to exchange-traded Bitcoin products with the Securities and Exchange Commission (SEC) on January 5. The business plans to start trading options later this year, which would be a significant turning point in the development of bitcoin investments.
Views of Analysts Regarding the ETFs
Institutional investors may be thinking differently, according to economic futurist Dave Nadig of VettaFi. He thinks institutional decision-makers might be swayed by including alternative investing possibilities in crypto funds. With the prediction that “now, every participant in the crypto ecosystem, even those unfamiliar with crypto speculation, will have a stake,” Nadig also predicted the arrival of several hedge fund participants in the cryptocurrency space.
In addition, Nadig presented an intriguing outlook on the direction that Bitcoin derivatives products may go, highlighting the importance of zero-day options, or “0DTEs.” These contracts, whose expiration date coincides with the trading day, have the potential to grow into a big trend if the performance of Bitcoin is comparable to that of individual stocks.
Cboe’s Catherine Clay sounded wary despite the euphoria around Bitcoin ETFs and options. She emphasized that patience is required because the authorization to provide alternatives is still pending. Clay underlined their dedication to carefully and strategically acquire alternatives regarding these ETFs to create a welcome atmosphere for new entrants into the bitcoin market.
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