Here's what Hong Kong Bitcoin ETFs are missing to attract more interest

Since its debut more than a month ago, the Hong Kong virtual asset ETF has been attracting serious attention from institutional investors.

According to Chris Barford, who is an experienced consultant in the field of financial services, there is a growing interest among institutional investors, as revealed by a recent study conducted by Ernst and Young, to increase their allocations to virtual assets in the near future

However, this enthusiasm is not shared by the main banks, which have so far refrained from accepting these funds. This is most likely due to the anti-money laundering (AML) and know-your-customer (KYC) compliance concerns that traditional banking structures face, Barford noted, also pointing out that the lack of technical knowledge among people working in these financial institutions is another major factor contributing to their concerns

The fact that, although the product is already on the market, there are no signs of support for it from any traditional bank is indicative of wider industry trends; these findings were clarified through an interview with Chris Barford, heavily involved in financial advisory services in Hong Kong, who elaborated on why they might be so reserved about them.

The talent shortage is not only a local but also a global problem that poses a serious challenge to financial institutions. Barford emphasized the need for traditional financial institutions to balance regulatory requirements with growing customer demands in the evolving virtual asset landscape.

Institutional investors are gradually adapting their investment strategies to include virtual assets, as noted by Chris Barford. Citing an Ernst Young survey, Barford notes a noticeable shift in institutional attitudes, with many planning to engage more deeply in virtual assets over the next 2 to 3 years. For assets under management exceeding $500 billion, large investors are considering allocating about 1% of their assets to virtual currencies, considering the potential for attractive returns despite market volatility.

At the same time, traditional financial institutions are beginning to explore the underlying technology of virtual assets, particularly its potential to enhance payment, settlement and custody services. Tokenization is emerging as a significant trend, exemplified by HSBC's offering of tokenized gold to retail investors in Hong Kong. This trend is expected to extend its impact to various asset classes, including real estate, signaling a transformational shift in the financial landscape.