Three Asian ventures have joined forces to launch Hong Kong’s first-ever liquidity ETF fund. A statement released Wednesday said the fund is valued at HK$1 billion(about $128 million).
LD Capital and Antalpha Ventures, along with quantitative trading firm Highblock, have joined forces to create a market-making service. Their liquidity fund aims to increase activity in Hong Kong’s cryptocurrency ETF market. This will provide smoother trading and more efficient capital flow in the ETF market in Hong Kong, the statement said.
How do ETF liquidity funds provide liquidity for cryptocurrency trading?
ETF liquidity funds increase the ease of trading in specific ETFs by acting as market makers. They collect investors’ cash and use it to actively buy and sell shares of those ETFs. This continuous buying and selling creates a more liquid market for the target ETF. As a result, investors can more easily jump into or out of their ETF positions without being exposed to large price movements.
Some examples of liquid cryptocurrency ETFs include B2Broker, Flow Traders and Virtu Financial. Jane Street has proven to be the top choice for authorized participants among U.S. Bitcoin ETF issuers. This means that it has been frequently listed on exchanges by companies seeking to launch Bitcoin ETFs in the US.
These funds help create and redeem shares and maintain market liquidity by offering ongoing market making services.
Hong Kong funds attract a variety of investors
The launch of the liquidity fund comes at a time when Hong Kong is pushing hard to be a hub for digital assets. The Securities and Futures Commission (SFC) has just stimulated the market with several funds for virtual assets from several fund managers, and some funds began trading on April 30.
These new cryptocurrency ETFs are off to a good start, amassing $230 million in assets under management (AUM) in their first week. Leading the pack is China Asset Management (China AMC), whose Bitcoin ETF has attracted $116 million, with its Ethereum ETF at $19 million.
The main driver may be the big money coming from China’s accumulated wealth in the city. In addition, Asia-Pacific cryptocurrency exchanges and market makers may step in, driving further activity.
