Hong Kong to Get First Bitcoin Inverse Investment Product, Adding to Crypto ETFs

Hong Kong’s first Bitcoin The inverse investment product, which offers returns based on price drops of the world’s largest cryptocurrency token, debuts on the city’s stock exchange on Tuesday, as the Asian financial hub continues to expand its virtual asset product offerings to attract investors. The exchange’s decision to list CSOP Asset Management’s new Bitcoin Futures Daily Inverse product, the first of its kind in Hong Kong, reflects the city’s ongoing efforts to diversify its cryptocurrency-related financial product offerings and become a hub for such activity. Hong Kong Exchanges and Clearing (HKEX) announced the product’s approval in a statement last week. The offer comes three months after the city approved the launch of six exchange-traded funds (ETFs) that invest directly in bitcoin and ether, the world’s two largest cryptocurrency tokens. The Hong Kong exchange was open to listing leveraged and inverse crypto products, HKEX’s head of exchange-traded products, Brian Roberts, told Bloomberg in April.

Inverse products are structured like ETFs, but aim for short-term investment results and are aimed at professional investors oriented towards trading.

Instead of investing directly in bitcoin, CSOP’s new product, denominated in U.S. dollars, invests primarily in short positions in bitcoin futures traded on the Chicago Mercantile Exchange, the company said in regulatory filings last week. The strategy aims to allow traders to profit from market price declines.

These products are subject to extreme price volatility that could wipe out investments, the CSOP warned, and values ​​could drop more than 20 percent in a single day.

Hong Kong has accelerated efforts to boost its virtual business sector, part of a broader effort by the city to maintain its status as a financial hub, which has taken a hit in recent years.

The city was the first major financial market to launch spot ether ETFs, months in front of the USA. Last year, the Securities and Futures Commission established a licensing regime for centralized cryptocurrency exchanges, with preliminary approval granted to 11 companies so far. The Hong Kong Monetary Authority is now moving to regulate stablecoins, or crypto tokens that peg their value to other assets, typically fiat currencies like the Hong Kong dollar and the U.S. dollar.

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