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Kraken Unit CEO Anticipates Hong Kong Crypto ETFs Will Exceed $1 Billion in Assets Under Management by 2024
The CEO of CF Benchmarks, a division of the cryptocurrency exchange Kraken, forecasts that crypto exchange-traded funds (ETFs) in Hong Kong will surpass their unimpressive beginnings and gather over $1 billion in assets under management (AUM) by the conclusion of 2024.
CF Benchmarks, located in London, provides reference data for crypto ETFs, with a primary emphasis on bitcoin products such as BlackRock’s IBIT.
The firm currently manages around $24 billion in AUM within this sector, accounting for approximately half of the crypto benchmarking market.
Despite the relatively low trading activity during their recent launch, CF Benchmarks is now partnering with the new ETFs in Hong Kong, as reported by Bloomberg on Friday.
The company licenses its benchmarks to funds and imposes fees that typically rise in accordance with the increase in AUM.
CF Benchmarks Anticipates Crypto ETFs to Broaden to Other Nations
CF Benchmarks recognizes the potential for crypto ETFs to extend to additional countries.
CEO Sui Chung expects their introduction in South Korea and Israel. They highlighted that South Korea has adopted ETFs as a favored long-term savings vehicle and has demonstrated high rates of digital asset adoption.
Previously, CF Benchmarks projected $5 billion in assets for US spot-Bitcoin ETFs utilizing its indexes this year. However, this figure has exceeded expectations, reaching more than four times that estimate.
Chung anticipates that products in Hong Kong could gather as much as $1 billion in funds under management by the end of 2024.
The launch of US ETFs triggered a surge that drove Bitcoin to a peak of nearly $74,000 in March.
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However, since that time, the cryptocurrency has faced a decline of about $14,000 as investor interest in the funds diminished.
On Wednesday, nearly a dozen US ETFs recorded their largest daily net outflow, resulting in assets under management totaling approximately $47 billion.
CF Benchmarks Foresees Notable Revenue Growth
CF Benchmarks, based in London, anticipates revenue growth in the “mid-double digits” this year, according to Chung.
The firm’s latest UK accounts indicate that revenue reached £6 million ($7.5 million) in 2022.
To facilitate its growth, the company intends to expand its workforce by about one-third, exceeding 40 employees.
Kraken, one of the largest cryptocurrency exchanges globally, acquired CF Benchmarks in 2019 for a nine-figure amount, as disclosed in the company’s statements at that time.
Founded in 2017, CF Benchmarks provides Bitcoin pricing for derivatives on the Chicago Mercantile Exchange, which continues to be a significant revenue source for the firm.
Hong Kong has introduced its initial set of ETFs focused on cryptocurrencies, indicating potential competition for the popular Bitcoin products available in the United States.
Harvest Global Investments Ltd., the local branch of China Asset Management, along with a collaboration between HashKey Capital Ltd. and Bosera Asset Management (International) Co., launched Bitcoin and Ether ETFs in the city on Tuesday.
Rebecca Sin from Bloomberg Intelligence estimates that Bitcoin and Ether funds in Hong Kong could accumulate approximately $1 billion over the next two years.
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