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Cryptocurrency News Articles
Hong Kong's Crypto ETFs Debut Disappoints, Casting Doubts on Hub Aspirations
May 03, 2024 at 07:06 am
Hong Kong's debut spot Bitcoin and Ether ETFs have underwhelmed, accumulating only $200 million in assets under management despite high expectations. Market participants attribute the lackluster performance to capital restrictions that limit accessibility to Hong Kong residents and overseas traders. Nevertheless, some remain optimistic about the ETFs' prospects, citing a recent survey indicating strong investor interest in the region.
Hong Kong's Subpar Crypto ETF Debut Raises Concerns
Hong Kong's highly anticipated spot Bitcoin and Ether ETFs have underperformed expectations, casting doubt on the region's potential as a major crypto hub. Despite the hype surrounding these locally-traded funds, they have only garnered a meager $200 million in assets under management (AUM) since their April 30 launch. This dismal figure pales in comparison to the billions of dollars amassed by their U.S. counterparts within days of their introduction.
Market analysts have expressed disappointment with the ETFs' lackluster performance, particularly given the historically bullish sentiment toward cryptocurrencies and the growing popularity of digital assets in East Asia. Bloomberg's senior ETF analyst, Eric Balchunas, cautioned against overly optimistic expectations, citing the limited accessibility of the funds to Hong Kong's small population and the dominance of U.S. ETFs in the global crypto market.
Data from Arkham Intelligence suggests that the majority of the AUM in two of the ETFs, the Bosera HashKey Bitcoin ETF and Bosera HashKey Ether ETFs, originated from pre-listing subscriptions, with post-debut trading volume remaining low. This suggests that the ETFs have failed to attract significant interest from investors.
The ETFs' underwhelming performance can be attributed to several factors. First, capital restrictions limit their accessibility to Hong Kong's 7.5 million residents and some overseas traders, while excluding the massive Chinese mainland market with over 1.4 billion people. Additionally, Hong Kong residents already had access to U.S. spot Bitcoin ETFs prior to the launch of the local funds.
Despite these challenges, some remain optimistic about the ETFs' long-term prospects. A recent survey by Hong Kong crypto exchange OSL revealed that 77% of crypto investors in the city plan to invest in the local ETFs. Gary Tiu, OSL's executive director and head of regulatory affairs, interprets this positive investor sentiment as an indication of the growing acceptance and importance of digital assets in the region.
While the ETFs' debut has been lackluster, analysts note that they are still in their early stages and have the potential to grow in the future. Balchunas believes that the ETFs could reach an AUM of $1 billion within two years, although this would still fall short of the tens of billions of dollars managed by their U.S. counterparts.
Chinese Police Crack Down on Crypto Airdrop Fraud
Amidst China's ongoing ban on cryptocurrencies, police have arrested an individual known as "Lan" for allegedly impersonating a Starknet developer and fraudulently claiming 40,000 STRK tokens, worth $120,000 at the time, from the Ethereum layer-two solution's official airdrop.
Investigators determined that Lan had created false identities and submitted multiple airdrop claim forms, ultimately stealing the victim's tokens. The funds were subsequently converted into USDT and transferred to his OKX wallet.
Lan's arrest highlights the ongoing risks associated with crypto airdrops, which have become a lucrative target for fraudsters. Despite warnings from project developers, accounts from airdrop farmers and copycat accounts were allegedly included in the official Starknet airdrop.
Binance Shuts Down Hong Kong-Affiliated Entity
HKVAEX, a Hong Kong-based crypto exchange believed to have ties to Binance, has ceased operations as of May 1. The exchange has instructed users to withdraw their assets or face a custodian fee.
HKVAEX had previously withdrawn its application for a crypto exchange license in Hong Kong, citing undisclosed reasons. Speculation suggests that the withdrawal may have been prompted by compliance issues or other factors.
Binance Co-Founder Sentenced to Prison for Money Laundering
In a stunning turn of events, Changpeng Zhao (CZ), the co-founder and former CEO of Binance, has been sentenced to four months in prison after pleading guilty to money laundering charges. The renowned blockchain executive expressed remorse for his actions and vowed to focus on the next chapter of his life.
CZ founded Binance in 2017 and quickly transformed it into the world's largest crypto exchange by trading volume. However, the exchange's rapid growth was accompanied by inadequate compliance measures, ultimately leading to a $4.3 billion settlement with the U.S. Department of Justice and CZ's resignation as CEO.
The sentencing of CZ highlights the importance of compliance in the crypto industry and the increasing scrutiny that regulators are placing on exchanges. Binance's new CEO, Richard Teng, has emphasized that the exchange has taken significant steps to enhance its compliance infrastructure and address past shortcomings.
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