According to the CEO of CF Benchmarks, a subsidiary of cryptocurrency exchange Kraken, the crypto exchange-traded funds (ETFs) in Hong Kong that had a lackluster start are expected to gather over $1 billion in assets under management (AUM) by the end of 2024.

CF Benchmarks, based in London, specializes in providing reference data for crypto ETFs, with a particular focus on bitcoin products like BlackRock’s IBIT. Currently, the company oversees approximately $24 billion in AUM in the crypto benchmarking market, which accounts for around half of this market segment.

Despite the initial low trading volume observed during their recent introduction, CF Benchmarks is now collaborating with the new ETFs in Hong Kong, as reported by Bloomberg on Friday. This collaboration involves licensing CF Benchmarks’ benchmarks to these funds and charging fees that typically increase in line with the growth of AUM.

The prediction of accumulating over $1 billion in AUM for the crypto ETFs in Hong Kong by the end of 2024 reflects the CEO’s optimism about the potential growth and adoption of these investment products. It suggests that despite the slow start, there is a belief that investor interest and participation will increase over time.

ETFs are investment vehicles that enable investors to gain exposure to a basket of assets, such as cryptocurrencies, through a publicly traded fund. They offer a regulated and convenient way for traditional investors to access the crypto market without directly purchasing and storing digital assets. The success and growth of crypto ETFs would provide institutional and retail investors in Hong Kong with a regulated and accessible avenue to invest in cryptocurrencies.

It’s worth noting that the actual performance and adoption of these crypto ETFs will depend on various factors, including market conditions, investor sentiment, regulatory developments, and the overall acceptance and understanding of cryptocurrencies as an asset class. As the crypto market continues to evolve, the success of these ETFs will be closely watched by industry participants and regulators alike.

CF Benchmarks Anticipates Expansion of Crypto ETFs into Additional Countries

According to CF Benchmarks, there is potential for crypto exchange-traded funds (ETFs) to expand to other countries beyond Hong Kong. CEO Sui Chung anticipates the arrival of crypto ETFs in South Korea and Israel, citing South Korea’s favorable environment for ETFs as a long-term savings option and its high adoption rates for digital assets.

Previously, CF Benchmarks had expected that ETFs utilizing its indexes would accumulate $5 billion in assets for US spot-Bitcoin ETFs this year. However, the actual amount has far surpassed expectations, reaching over four times that estimate.

Chung predicts that Hong Kong-based crypto ETFs could amass as much as $1 billion in assets under management by the end of 2024. This projection reflects the CEO’s optimism about the growth potential of these investment vehicles.

The introduction of US ETFs has historically had a significant impact on the crypto market. For instance, it led to a rally that propelled Bitcoin to a record high of nearly $74,000 in March. However, since then, Bitcoin has experienced a decline of approximately $14,000 as investor demand for the funds diminished.

In recent times, nearly a dozen US ETFs witnessed their largest daily net outflow, resulting in assets under management declining to around $47 billion. This suggests a decrease in investor interest and a potential shift in market dynamics.

While the success and adoption of crypto ETFs in different countries depend on various factors such as regulatory frameworks, market conditions, and investor sentiment, CF Benchmarks sees potential for expansion beyond Hong Kong. The company’s CEO anticipates the arrival of crypto ETFs in South Korea and Israel, citing favorable conditions and high digital asset adoption rates. However, the actual growth and acceptance of crypto ETFs in these countries will unfold over time and depend on various market factors.

CF Benchmarks Forecasts Substantial Revenue Growth in the Future

CF Benchmarks, headquartered in London, is expecting revenue growth in the “mid-double digits” this year, according to CEO Sui Chung. The firm’s recent UK accounts indicate that revenue reached £6 million ($7.5 million) in 2022.

To support its expansion plans, CF Benchmarks intends to increase its workforce by approximately one-third, surpassing 40 employees. This move reflects the company’s commitment to meet the growing demand for its services and capitalize on market opportunities.

In 2019, Kraken, one of the world’s largest cryptocurrency exchanges, acquired CF Benchmarks for a nine-figure sum. This acquisition has positioned CF Benchmarks as a key player in the cryptocurrency benchmarking market.

Established in 2017, CF Benchmarks provides Bitcoin pricing for derivatives on the Chicago Mercantile Exchange (CME). This remains a significant revenue stream for the company, highlighting its role in providing accurate and reliable pricing data for cryptocurrency derivatives trading.

Hong Kong has recently launched its first batch of ETFs focused on cryptocurrencies, presenting potential competition for popular Bitcoin products in the United States. Harvest Global Investments Ltd., the local unit of China Asset Management, and a partnership between HashKey Capital Ltd. and Bosera Asset Management (International) Co., listed Bitcoin and Ether ETFs in the city on Tuesday.

According to Bloomberg Intelligence’s Rebecca Sin, Bitcoin and Ether funds in Hong Kong could accumulate approximately $1 billion in assets over the next two years. This demonstrates the potential growth and investor interest in cryptocurrency ETFs in the region.

The entry of these ETFs in Hong Kong signifies the increasing acceptance and adoption of cryptocurrencies as investment assets. It also presents an opportunity for CF Benchmarks to collaborate with these ETFs by providing benchmark data and further expanding its market presence.

Overall, CF Benchmarks expects revenue growth, plans to expand its workforce, and remains a significant player in the cryptocurrency benchmarking market. The launch of cryptocurrency ETFs in Hong Kong further underscores the growing interest in digital assets and presents potential opportunities for the industry as a whole.

By ailf

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