Introduction
The cryptocurrency market has seen significant growth in recent years, with the launch of various exchange-traded funds (ETFs) in both Australia and Hong Kong. These two markets are now competing for market share, creating a two-horse race that is expected to drive innovation and differentiation in the industry.
Australia’s Early Mover Advantage
In June 2024, Monochrome Asset Management launched the first and only Australian ETF to hold Bitcoin directly on Cboe. This was followed by VanEck launching its product as a sub-fund of its United States version on the Australian Securities Exchange (ASX) on June 20.
Expansionist Plans for Long-Term Growth
While these providers have expansionist plans for long-term growth, they will likely face competition from other firms with applications in the pipeline. Australia is eyeing the broader Asian market, while Hong Kong aims to tap into the massive mainland China market through the Stock Connect deal.
The Regulatory Environment
Regulators in both markets are taking a proactive approach to support the development of crypto ETFs. In Hong Kong, the regulator pushed for the launch of ETFs, while in Australia, regulators have put in place a custody regime that safeguards consumers and provides clarity on infrastructure.
Market Comparison: Hong Kong vs. Australia
The combined assets under management (AUM) of all ETFs in the seven leading APAC markets accounts for just 4% of their total combined market cap. In contrast, the U.S. market has seen significant growth, with ETF AUM accounting for 16% of the total market.
Strategic Differences: Hong Kong and Australia
The Hong Kong and Australian markets have different constructs when it comes to crypto ETFs. While Hong Kong is pushing for a larger market through the Stock Connect deal, Australia’s regulators are taking a more reactive approach, responding to demand and industry trends.
ETF as a Service?
Monochrome’s strategy of leveraging its position amongst other local feeder Bitcoin ETFs as an Australian listed instrument in good standing under ASIC’s retail crypto asset licensing rules is an innovative approach that could potentially expand into other countries across the region. This concept, known as "ETF as a service," could revolutionize the way ETFs are managed and distributed.
The Future of Crypto ETFs
As the market continues to develop, we can expect to see more players entering the space. The Stock Connect deal in Hong Kong is a crucial factor that will determine the future of crypto ETFs in this market. If it happens, or even if it seems likely, we’ll start to see more applicants trickling in to compete for even a tiny slice of the world’s largest market.
Conclusion
The development of crypto ETFs in Australia and Hong Kong is a significant milestone that will drive innovation and differentiation in the industry. As the market continues to evolve, we can expect to see new players entering the space and innovative strategies emerging.
Author Bio:
Abel Seow is the managing director of APAC Sales at BitGo, responsible for sales, partnerships, and strategy for the APAC region. Prior to joining BitGo, he held a career in wealth management and was most recently a private banker at the Bank of Singapore. This article is for general information purposes only and should not be taken as legal or investment advice.
Disclaimer:
This article is intended for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities or products. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
