Hong Kong's ETFs have just $291 million in assets under management. FalconX's David Lavant says patience pays off. Other Asian markets weigh in on their own crypto ETFs.
David Lavant isn't giving up on Hong Kong crypto ETFs.
The head of research at FalconX, an institutional crypto prime brokerage, has every right to be bearish on the instruments.
with $290.6 million In assets under management, Hong Kong's exchange-traded funds in spot bitcoin and ether are a fraction of the roughly $57 billion currently held by their US counterparts.
Some days six funds did not register net inflows.
Moreover, it doesn't look like South Korea and other Asian markets are expecting their own bitcoin ETFs to be green-lit anytime soon.
'It's common for ETF flows to slow after a strong launch, then build steadily over time.'
– David Lavant, FalconX
Yet Lavant believed estimate Hong Kong ETFs will reach $1 billion in assets by year-end, still achievable.
“[It] By the end of 2025 may be more realistic. However, given the fast-paced nature of crypto, I cannot completely rule it out,” Lavant said News.
“The numbers certainly look small compared to what we've seen in other countries. But given the size of the Asian market and its importance to the entire crypto ecosystem, I believe it could go much higher,” he said.
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ETF sponsors
FalconX has executed more than $1 trillion in cumulative trades in digital assets since going live in 2018. As a prime brokerage, the firm plays a key role in making markets for Bitcoin ETF sponsors in the US and increasing liquidity in their products.
Regulatory clarity is one of the key barriers preventing rapid growth.
And days go by when there are no flows into or out of any ETFs.
However, Lavant was not concerned about the sloppiness.
“It's common for ETF flows to slow after a strong launch, then build steadily over time, especially during periods of low market volatility — as we've seen in recent months,” Lavant said.
A significant obstacle
However, regulatory uncertainty remains a significant obstacle.
said Patrick Pan, CEO of Hong Kong-based regulated digital assets platform OSL News Regulatory approvals in July—specifically around Ethereum staking—could catalyze growth in the ETF market.
OSL, in partnership with ChinaAMC and Harvest Global, helped launch Hong Kong's first spot crypto ETFs.
Pan acknowledged that initial uptake has fallen short of expectations, but expressed hope that new products such as stocking could boost expansion.
“There are a lot of different funds and crypto exchanges to negotiate with the Securities and Futures Commission,” Pan said.
Still, many obstacles remain.
One of the biggest is the lack of access to mainland Chinese capital — something that's unlikely to change anytime soon, given China's stance on crypto investments.
Additionally, many Hong Kong investors have direct access to US markets, reducing the appeal of locally listed ETFs.
Although the infrastructure around ETFs has taken time to develop, more and more institutions are making access available to customers.
In early August, Mox, a digital bank backed by Standard Chartered, said it plans to add crypto ETFs to its app for customers, adding direct crypto investments as well.
There is Callan Quinn News' Hong Kong-based Asia Correspondent. Contact at [email protected].
Related TopicsBITCOIN ETFHONG Kong
