UBS joins HSBC in enabling clients to trade crypto ETFs

This move aligns UBS with its competitor HSBC Holdings Plc and others who are tapping into the burgeoning digital asset market in the city.

Starting from Friday, UBS’s wealthy clients in Hong Kong will have access to three crypto-related futures ETFs on its platform. These ETFs include the Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures ETFs, all of which have been authorized by the Securities and Futures Commission (SFC).

The move comes as Hong Kong explores the possibility of allowing retail access to spot ETFs that directly invest in cryptocurrencies. The SFC recently updated its guidance on virtual asset-related activities for intermediaries, expanding the investor range for crypto ETF engagement. However, the update mandates a knowledge test for virtual assets before transactions can be executed. This requirement, aimed at safeguarding investor interests, does not apply to institutional investors and qualified corporate professional investors.

UBS Group AG’s foray into crypto-linked ETFs in Hong Kong reflects a broader trend in the global financial industry, where traditional institutions are increasingly incorporating digital assets into their offerings. HSBC Hong Kong, a division of the Hong Kong and Shanghai Banking Corporation, introduced its inaugural cryptocurrency offerings back in June.

HSBC provides cryptocurrency ETFs that are listed on the Hong Kong Exchange (HKEX), which currently features three investment vehicles: the CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.

Hong Kong’s financial regulators have relaxed their stance on cryptocurrency products and services, broadening their reach to beyond just professional investors. The move comes at a time when the global financial scene is abuzz with the possibility of the U.S. green-lighting spot bitcoin ETFs in the coming months.

Previously, brokers in Hong Kong were limited in offering services primarily to professional investors. However, as the city seeks to position itself as a virtual asset hub, these changes signal a more accommodating stance towards digital currencies and their associated products.

However, the adjustments come with their own set of conditions. Locals looking to invest in spot products need to pass a one-time assessment to gauge their investment knowledge. Moreover, to ensure they can bear the potential risks associated with virtual asset trading, they must have sufficient net worth. Intermediaries are also obligated to provide these clients with comprehensive risk disclosure statements.