HSBC's new ETF: what does it mean for the blockchain investment war?

According to crypto journalist Colin Wu, the Hong Kong and Shanghai Banking Corporation (HSBC) is now offering cryptocurrency services to its customers in Hong Kong.

HSBC is the biggest bank in Hong Kong, and according to the report, HSBC is the first bank in Hong Kong to allow its customers to buy and sell Bitcoin and Ethereum Exchange Traded Funds (ETFs) on the Hong Kong exchange.

Simultaneously, HSBC also launched the Virtual Asset Investor Education Centre. Anyone who hopes to invest in the ETFs will have to read and confirm educational materials and risk disclosures before investing.

The move comes after reports earlier this month of the Hong Kong Monetary Authority pressuring major banks including HSBC and Standard Chartered to accept crypto exchanges as clients, amid a backdrop of Hong Kong's push towards becoming a crypto hub.

Why is this important?

Currently, there are three crypto ETFs listed on HSBC Hong Kong's platform- CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures ETF.

Crypto ETFs have been available for trading since December, when the Hong Kong Stock Exchange listed two cryptocurrency funds.

However, this new development means that Hong Kong-based users are now able to trade crypto ETFs at HSBC.

Yat Siu, Executive Chairman and Co-Founder of Animoca Brands, applauded the move as evidence of Hong Kong's commitment and strong desire to become the Web3 capital of the world.

“Not too long ago, the Hong Kong Monetary Authority (HKMA) was reminded to support the industry and this is an example of such a development. We are very encouraged by this development and Animoca Brands is proud to be based in Hong Kong.", said Yat Siu, Executive Chairman and Co-Founder of Animoca Brands.

This listing also comes as other traditional finance companies begin their move into the Web3 space.

Two weeks ago, BlackRock, the world's largest asset manager, also filed to list a Bitcoin ETF. This was swiftly followed by similar filings from WisdomTree and Valkyrie.

Crypto twitter was also in an uproar last week as a new crypto exchange known as EDX debuted with the backing of Wall Street financial giants such as Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, Virtu Financial, and Charles Schwab Corp

Yet, several prominent crypto companies are also facing lawsuits from US enforcement agencies. The SEC is charging Binance with operating an unlicensed exchange and of commingling customer funds with business revenue, and there are outstanding lawsuits against Coinbase and Ripple as well.

Is blockchain's future in Asia?

This recent development is far from an isolated incident. As Yat Siu noted, it's part of the government's drive towards making Hong Kong a global centre for crypto.

Almost after the SEC announced their lawsuit against Coinbase, Johnny Ng, a member of Hong Kong's Legislative Council, encouraged the crypto exchange to move to Hong Kong, and tweeted that he would welcome all global virtual asset trading operators' to Hong Kong, and that he would be happy to provide any assistance these companies needed.

And Hong Kong isn't the only one moving towards legalising and regulating cryptocurrencies and digital assets.

The Monetary Authority of Singapore (MAS) has also been granting licences to crypto companies to set up shop in the city-state, and has released several white papers on digital asset and cryptocurrency regulation.

Just yesterday, the MAS proposed a design framework for interoperable digital asset networks. This was part of a wider initiative known as Project Guardian, which would test asset tokenisation across different financial asset classes.

Last week, the MAS also proposed standards for the use of digital money, including central bank digital currencies and stablecoins.

While the MAS has made clear that it does not welcome cryptocurrency speculation, it has nonetheless also made clear that it believes that blockchain technology has much to offer.

Meanwhile, US regulators seem to be more involved in fighting amongst themselves and asserting their dominance over crypto companies. More than a few companies, including Coinbase, have already indicated their displeasure with the US regulatory regime, and suggested that they might move overseas if things do not change for the better.

In fact, some crypto executives have noted that the new HSBC ETF listing is more inclusive than even what is being discussed and implemented in the US.

"HSBC's ETF inclusion in their investment platform is a significant move that signals institutional support for crypto in Hong Kong. It is particularly interesting since the Ethereum ETF is included on the same footing as Bitcoin, whereas US institutions appears to be more bitcoin-focused.", said Sandy Peng, Co-Founder of Scroll

While regulators continue to debate what is the best way to deal with the growing crypto industry and even if there should be regulation of the industry, Asia seems to be surpassing the US as a location of choice for companies to set up shop.

Hong Kong, at present, seems to have embraced cryptocurrency and blockchain technology completely- and seems willing to accept both the risks and rewards that come with such a policy. Meanwhile, Singapore seems to be adopting a more cautious approach. But either seems to be preferable, at least for crypto companies, to the approach adopted by US regulators of regulation by enforcement.

While the fruits of these policies are yet to be seen, it's clear that the fight for investment is now in full swing- and Asia seems poised to take a decisive lead.