China-headquartered asset manager CSOP has announced that its Bitcoin Futures ETF (3066.HK) and CSOP Ether Futures ETF (3068.HK) will be listed on the Hong Kong Stock Exchange as Asia’s first listed bitcoin and Ether futures ETFs.
The firm writes that to capture the performance of bitcoin and Ether, 3066.HK and 3068.HK are actively managed to invest into Chicago Mercantile Exchange listed bitcoin and Ether futures to track their respective prices.
The firm writes that with the same listing price at around HKD 7.75 per unit, trading lot of 100 and management fee of 1.99 per cent, 3066.HK and 3068.HK have received USD53.89 million and USD19.74 million initial investment respectively.
The firm writes that ‘Virtual asset’ refers to digital representations of value which may be in the form of digital tokens (such as utility tokens, stablecoins or security- or asset-backed tokens) or any other virtual commodities, crypto assets or other assets of essentially the same nature.
Global virtual asset market cap reached a record high of USD3 trillion in November 2021, with 10,000+ types of cryptos and 600+ exchanges.
Virtual asset has become an asset class too big to ignore, the firm says, and with great potential to grow further. Bitcoin and Ether are the most representative crypto assets in current market taking up total market cap of 39 per cent and 17 per cent respectively. As of the end of October 31, 2021, the net inflows to ETPs tracking the performance of global virtual asset soared 100 times to USD7,677 million compared with USD75 million in 2019.
As an emerging asset class, virtual assets have experienced huge volatilities in prices, the firm notes. As an example, bitcoin’s price rallied to over USD66,000 each in 2021 and then withdrew around 75 per cent from its highest level as of the end of November 2022, which may be incubating another round of rebounds.
In view of the increasing market acceptance of virtual assets, CSOP writes that Hong Kong’s Securities and Futures Commission announced to allow the launch of ETFs tracking crypto futures for public offering on 31 October 2022, marking the first time Asian retail investors can get this type of exposure to virtual assets.
The newly-listed virtual assets futures ETFs are easy for investors to buy and sell through traditional brokerage or investment accounts with a minimum investment of around USD100, CSOP writes. Active investment strategies are adopted to allow flexibility in portfolio composition, rolling strategy, and handling of any market disruptions. Furthermore, fund assets of virtual assets futures ETFs are maintained by an independent custodian with great protection and stringent regulation.
“The approval of two new ETFs based on CME bitcoin and Ether futures marks an important milestone for the digital asset ecosystem in Asia,” says Tim McCourt, Global Head of Equity and FX Products, CME Group. “The listing of these ETFs underscores the robust growth and increasing client demand for exposure to bitcoin and ether via CME Group’s transparent, highly regulated and deeply liquid benchmark futures contracts – both of which have seen a combined increase of 20 per cent in average daily volume versus 2021. Additionally, the introduction of these funds, from firms like CSOP Asset Management, will create new opportunities for a broad array of institutional and retail investors.”
“CSOP is the first Chinese offshore asset management company established in Hong Kong. Since its establishment in 2008, CSOP has been committed to bringing high-quality and creative investment tools to Hong Kong investors. Today we are the first ETF manager to bring the most cutting-edge virtual assets ETF products to Hong Kong and Asian retail investors in a flexible and transparent manner. Investors can easily track Bitcoin and Ether prices with the conventional investment tool of ETFs,” concludes Ding Chen, Chief Executive Officer of CSOP.