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The crypto craze amongst Asian traders is spurring asset managers within the area to grab alternatives to woo them over with their merchandise regardless of tightening regulation, Cerulli Associates notes in a brand new report.
Numerous cryptocurrency and blockchain-focused funds that put money into the broader universe with out straight investing in cryptocurrency have been rolled out this previous yr in Singapore, Hong Kong and Korea, whereas Australia has seen the area’s first alternate traded funds with direct publicity to bitcoin and ether.
“For traders, the rising variety of mutual funds and ETFs coming to market assist to widen product decisions and even legitimise crypto investing by offering arguably safer routes to accessing this asset class, in comparison with direct crypto investing,” stated Ken Yap, Singapore-based managing director for Asia at Cerulli.
“Crypto funds provide an essential asset-gathering alternative for managers,” Yap added.
Regional regulators have been cracking down on the asset class, nevertheless, with the Financial Authority of Singapore curtailing retail access to crypto in August and Thailand’s Securities and Change Fee overhauling advertising rules for digital asset firms.
South Korea additionally doesn’t at present permit local players to faucet providers from cryptocurrency exchanges.
This surroundings of accelerating regulatory scrutiny and market volatility, nevertheless, could be “key promoting factors” for asset managers in offering crypto-related funds, slightly than merchandise which have direct publicity to the asset class, stated Yap.
The rising regulation has not stopped Asian managers from looking for alternatives on this area, with various Korean corporations taking steps to develop their digital asset capabilities.
In January, Korea’s Mirae Asset Monetary Group announced plans to roll out a digital property enterprise that might initially goal custody providers for cryptocurrency and non-fungible tokens and ultimately create loans and funds tied to digital property, the Korea Financial Day by day reported, citing business sources. That push got here amid rising demand for such providers.
KB Asset Administration, South Korea’s largest financial institution, introduced in February that it had created a digital asset administration preparatory committee to discover the event of digital property and synthetic intelligence funds.
KB AM rolled out the KB International Digital Chain Financial system fund, the primary technique within the nation that focuses on investments in blockchain know-how firms, in September final yr.
Technology Z and millennials had been fuelling the curiosity in crypto in South Korea, stated Cerulli.
Singapore can also be seeing sturdy curiosity amongst younger traders, with Cerulli citing a survey from final yr that discovered 51 per cent of these aged 25 to 44 had been extra prepared to put money into crypto, whereas solely 36 per cent of these aged 45 and over confirmed the identical curiosity.
Firstly of the yr, BNY Mellon Funding Administration was preparing to launch Singapore’s first retail-oriented fund that invests within the blockchain universe, amid rising curiosity in crypto property and associated know-how amongst native traders.
Thailand and Vietnam have additionally emerged as hotbeds for retail cryptocurrency investments in south-east Asia, even within the face of a worldwide market rout and tightened rules imposed on the extremely risky sector.
Thailand recorded $135.9bn in crypto worth transacted within the 12 months to June 2022, whereas Vietnam had $112.6bn, based on a report revealed by blockchain knowledge platform Chainalysis on September 21.
Crypto has additionally drawn curiosity from high-net-worth people, with Cerulli reporting that some non-public banks and household workplaces in each Singapore and Hong Kong are “seeing curiosity in direct crypto investing or crypto ETFs”.
There may be demand from distributors as nicely, with Cerulli’s survey indicating that they need asset managers to “develop area of interest product concepts that provide long-term alternatives, together with know-how themes equivalent to blockchain and crypto”.
ETFs are seen as one other technique to give much more retail traders entry to crypto. Australia has emerged as a regional chief within the crypto ETF area.
Australia’s first three cryptocurrency ETFs started trading in May. The Cosmos Function Bitcoin Entry, 21Shares Bitcoin ETP and 21Shares Ethereum ETP ETFs went stay on Australia’s various alternate, previously referred to as Chi-X Australia, that month.
In June, the Hong Kong arm of South Korea’s Samsung Asset Administration rolled out what it referred to as the first-ever international blockchain-related ETF in Asia. The Samsung Blockchain Applied sciences ETF is actively managed and might put money into blockchain-related ETFs, equivalent to cryptocurrency futures ETFs listed within the US.
*Ignites Asia is a information service revealed by FT Specialist for professionals working within the asset administration business. It covers every thing from new product launches to rules and business tendencies. Trials and subscriptions can be found at ignitesasia.com.