Despite a modest start in trading volume, CF Benchmarks, a subsidiary of cryptocurrency exchange Kraken, forecasts that crypto exchange-traded funds (ETFs) in Hong Kong will reach over $1 billion in assets under management by the end of 2024, according to a report by Bloomberg.
The London-based company, which provides benchmark data primarily for Bitcoin products like BlackRock’s IBIT, currently oversees about $24 billion in assets. This figure represents approximately half of the global market share in crypto benchmarking. CF Benchmarks earns revenue by licensing its indexes to funds, with fees that increase as assets under management grow.
Strategic Collaborations and Expansion Plans
CF Benchmarks is actively collaborating with newly launched ETFs in Hong Kong, aiming to replicate the success seen in other markets. According to CEO Sui Chung, there is potential for similar products to be introduced in South Korea and Israel, citing the high adoption of ETFs as long-term savings options in these regions. Previously, the company had anticipated $5 billion in assets from U.S. spot-Bitcoin ETFs using its benchmarks in 2023, but the actual figures have exceeded these expectations, quadrupling the initial forecast.
The launch of U.S. ETFs earlier in the year helped propel Bitcoin to nearly $74,000 in March, though the cryptocurrency has since seen a decrease in value, reflecting the volatile nature of digital assets. Recently, U.S. ETFs experienced significant daily net outflows, affecting the overall assets under management, which now stand at approximately $47 billion.
Revenue and Operational Expansion
CF Benchmarks reports robust financial health, with revenues reaching £6 million ($7.5 million) in 2022. Anticipating continued growth, the company plans to expand its team by one-third, aiming to exceed 40 employees. This expansion supports its broader strategy to enhance its benchmarking services and maintain a strong market position.
The introduction of Bitcoin and Ether ETFs in Hong Kong marks a new chapter for cryptocurrency investments in the region. Managed by local and international firms like Harvest Global Investments and a partnership between HashKey Capital and Bosera Asset Management, these ETFs are expected to attract significant interest, mirroring the growth trajectory projected by CF Benchmarks.
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