[Sponsored Article] Virtual assets and digital currencies have always been bubbling in the background of the traditional financial space since Bitcoin broke into the mainstream media towards the end of 2017 with its phenomenal price rise. Many may have scoffed at the idea of investing in Bitcoin — a ‘magical internet money’ — in the past few years, but a lot has changed in the space. Not only is Bitcoin being taken more seriously, as well as being normalized and legitimized, but it is also being seen as a real investment opportunity. People who once only had their eyes on the stock markets, and other traditional investment vehicles, are now starting to look for alternatives that both promise better returns and a way to move away from familiar limitations. The world has seen the world’s richest man, Elon Musk, take to social media to his 51 million followers to promote the cryptocurrency Dogecoin, but he has also gone the extra mile to invest $1.5 billion into Bitcoin through his company Tesla. Michael Saylor is another corporate leader who has put his weight behind Bitcoin as his company MicroStrategy, has continually been piling Bitcoin into their corporate investment portfolio. This new investment wave we are seeing is rather remarkable considering where Bitcoin has come from, but this movement is growing as witnessed by a new fund from Huobi Asset Management. One of the Largest Virtual Asset Funds in Asia The recently launched funds from Huobi Asset Management (Hong Kong) Limited (“Huobi Asset Management”), a wholly-owned subsidiary of Huobi Technology Holdings Limited (1611.HK), aimed at professional investors looks to meet a growing desire in Asia. The new offerings include three virtual asset funds and a private equity fund for blockchain mining-related businesses. The funds include a BTC tracker fund, an ETH tracker fund, and a multi-strategy virtual asset fund, all of which are solely invested in virtual assets with a total of more than 70 million U.S. dollars already having been raised. The BTC and ETH tracker funds are passive funds designed to mirror the performance of the corresponding virtual asset while the multi-strategy fund is an actively managed fund that is invested in a basket of diversified virtual assets, offering investors the potential for greater returns compared to passive allocation. Both the ETH tracking fund and the multi-strategy virtual asset fund are among the first in this category of virtual asset investment products to be issued by a licensed fund manager in Hong Kong. Making it Reachable One thing that has become clear in this new investment wave that deals in cryptocurrencies, is that major and professional investors are still on the hunt for familiarity. Bitcoin is a great product for individual investors new to the space as they can buy and hold it with around $10 and a smartphone. But, those looking to put millions into it are on the lookout for funds and products that have a touch of familiarity, as well as regulatory protections. One of the forerunners to institutional Bitcoin investing is Grayscale Bitcoin Trust in the US. Having procured the right regulatory greenlights, and with the right ambition and aim, this fund was a major hit on launch and has only been growing. Huobi Asset Management looks to be taking a similar page out of Grayscale’s book. In Hong Kong, Huobi Asset Management is the second fund manager to receive approval from the Securities and Futures Commission to issue 100% virtual asset funds. The ethereum tracking fund and the active multi-strategy multi-currency fund launched by Huobi Asset Management are among first virtual asset fund products issued by licensed fund managers in Hong Kong. The doors are essentially being opened here for professional investors who, no doubt by this stage, would have had a lot of FOMO around digital assets. But, with this major fund entering the space, with the right services as well as compliance and regulation, there is little holding back the investors now. Gillian Wu, head of Huobi Asset Management, explained further how this fund could be an ideal point of entry for this new investment movement in Asia: "According to the professional investors' knowledge level and risk appetite of virtual assets, we will advise our clients to choose the fund products that best suit their needs. For institutional, especially corporate clients, they want to allocate to virtual assets through a convenient and compliant channel to achieve diversification needs. “Our bitcoin and ethereum tracker fund, in the way of traditional financial products, solves the worries of clients who have to research on their own how to custody, how to account, how to audit this novel asset class and whether there are tax uncertainties, etc. At the same time, some ultra-high net worth individual clients, as well as some large virtual asset miners, who have previously been passively holding their virtual assets, started to look for options to achieve better returns through different market cycles compared to simple passive allocation, thus our active multi-strategy virtual asset fund is born.” A Growing Presence Asia has long been a powerhouse for the growth of cryptocurrency, but it has faced difficulties in adoption at times. While investment opportunities in this new digital asset market have flourished in other places — like the US with Grayscale, and in Canada with multiple new Bitcoins ETFs, there has been a void in the Asian market. Huobi Asset Management's move to offer this massive, digital asset funds with regulatory oversight represents an important step in welcoming the professional Asian investor to a place where they can be a part of this new movement. Catering for professional investors with a nascent asset like cryptocurrencies is not easy at the best of times, and it is made even harder by the positioning of these assets as untested and unfamiliar. However, with the right funding infrastructure, there can be huge potential for a surge in the new investment movement across Asia.
