Caixin
Mar 05, 2021 07:26 AM
FINANCE

Huobi Unit Wins HK Permission to Launch Pure Crypto Asset Funds

Prices of Bitcoin have surged almost 600% since the start of 2020.
Prices of Bitcoin have surged almost 600% since the start of 2020.

Huobi Technology Holdings Ltd., China’s largest cryptocurrency exchange platform, said its asset management subsidiary won approval from the Hong Kong securities regulator to launch 100% crypto asset management funds.

Hong Kong-listed Huobi said the unit would set up three funds to invest entirely in digital currencies, tracking Bitcoin, Ethereum and other crypto assets. The funds will be similar to what Grayscale offers U.S. investors. The company didn't disclose the size of the planned funds.

Fund managers around the world are racing to connect crypto assets with traditional capital markets. Canada’s asset management companies Purpose Investments and Evolve Funds Group Inc. recently won approval to launch exchange traded funds tracking the value of Bitcoin. U.S. asset manager VanEck is also seeking to set up similar products.

Huobi became the second company to secure a license from the Hong Kong Securities and Futures Commission to set up pure crypto asset funds after the Asian financial hub introduced virtual asset management rules in 2019.

Hong Hong-based financial service provider Venture Smart Financial Holdings Limited (VSFG) was the first to obtain a license in June. The company said it would raise $950,000 to set up a portfolio to invest in Bitcoins.

Huobi in July won a lighter version of crypto asset management license, which allows it to invest 10% of the funds it managed in cryptocurrencies, with the rest in equity and fixed income products.

More companies are considering raising crypto asset investment funds in Hong Kong. Reuters reported in November that crypto financial service provider Babel Finance submitted an application seeking the Hong Kong regulator’s permission to set up a $1 billion crypto fund.

Founded in China, Huobi moved its headquarters to Seychelles after Chinese regulators launched a crackdown on domestic crypto exchanges. China in 2017 became the first country in the world to ban fundraising through cryptocurrencies, known as initial coin offerings (ICOs), warning they were “giving rise to speculation and inviting suspicion of illegal financial activities.” Regulators on the mainland later expanded the crackdown to exchanges, prohibiting them from trading virtual currencies with legal tender.

Bitcoin slipped 3% Thursday in early U.S. trading, hovering around $49,000. Prices of the largest cryptocurrency have surged almost 600% since the start of 2020 on the back of wider mainstream adoption.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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