By
Bhushan Akolkar
May 17th, 2024
The companies said the rollout of the fund could be viewed as a significant step forward in enhancing the financial infrastructure of Hong Kong’s ETF market.
In a historic move, major blockchain venture capital firms in Asia have joined hands to introduce Hong Kong’s first-ever ETF liquidity fund. According to an official announcement on Wednesday, LD Capital, Antalpha Ventures (a subsidiary of Bitmain), and Highblock have jointly established a fund valued at 1 billion HKD worth approximately $128 million.
The fund’s primary mission is to inject liquidity, streamline capital flows, and mitigate risks stemming from liquidity fluctuations and transactional volatility within Hong Kong’s ETF market. The move aims to address existing market inefficiencies and provide a stable foundation for investors navigating the crypto landscape.
Enhancing Hong Kong’s ETF Market
Hong Kong commenced trading crypto ETFs on April 30, following months of anticipation since their launch in the United States. Unlike its American counterpart, Hong Kong greenlighted the launch of both spot Bitcoin and Ethereum ETFs, offering investors a diversified avenue to engage with the burgeoning crypto market.
Now, LD Capital, Antalpha Ventures, and Highblock have teamed up to introduce the inaugural liquidity fund. The fund will provide market-making services to ETF investors, shielding them from the volatility of the crypto market. With the fund fully operational, crypto ETF traders in Hong Kong can anticipate smoother transactions and increased market stability. The fund allows investors to enter and exit their ETF positions without abrupt price fluctuations.
The companies said the rollout of the fund could be viewed as a significant step forward in enhancing the financial infrastructure of Hong Kong’s ETF market. By fostering investor confidence and market stability, this initiative sets the stage for further growth and development in the region’s financial landscape.
In contrast to its US counterparts, the Hong Kong ETFs market experienced a sluggish start, marked by underwhelming inflows. As of May 6, the crypto ETFs had amassed approximately 4,400 Bitcoin, totaling around $276 million in assets under management.
Wintermute to Contribute to ETF Growth in Hong Kong
Meanwhile, the crypto liquidity fund was introduced shortly after Wintermute, a London-based crypto company, announced that it would provide liquidity for the Hong Kong-listed spot Bitcoin and Ethereum ETFs.
In a statement issued on May 7, Wintermute said it has partnered with OSL Digital Securities and HashKey HK Exchange. These companies currently serve as sub-custodians of crypto trading platforms in Hong Kong.
Wintermute’s collaboration with the entities aims to streamline the buying, selling, and delivery of underlying assets (Bitcoin and Ethereum) for both firms.
By ensuring a seamless creation and redemption process for the ETFs, Wintermute reinforces its commitment to enhancing market efficiency and accessibility. The company said the collaboration with OSL Digital Securities and HashKey HK Exchange is part of its global expansion move to explore the Asian market.