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  • Writer's pictureBlockstone Capital

Blockstone Capital Weekly Digest: Friday 30 June 2023

Updated: Jul 18, 2023

It was another milestone week for the institutional adoption of digital assets, with HSBC Hong Kong launching Bitcoin and Ethereum ETFs for sale in the region directly via its app.

This implicit stamp of approval for crypto assets by the bank, coupled with Fidelity's filing for a spot Bitcoin ETF, is generating a more bullish outlook for the future of the sector and higher hopes that the US SEC will finally approve such a trading vehicle for investors in the States.

This week, Bitcoin continued to trade marginally above $30K, while Ethereum has maintained the $1.85K mark. A notable top climber in the market cap ranks is Bitcoin Cash, which has surged 104% over the past seven days, riding high on its recent inclusion on EDX Markets (the Citadel, Fidelity and Charles Schwab- based crypto exchange).

According to research from The Block, Wednesday saw the highest volume of BCH transacted in a year, exceeding a staggering $750m. Now, without further ado, let’s jump into this week’s top stories.

Regards, Carl, Vegard and Yev

HSBC Hong Kong to allow trades of Bitcoin and Ethereum ETFs

The week started off strong, as it was revealed on Monday that HSBC Hong Kong is the first bank in the region to allow customers to buy and sell Bitcoin and Ethereum ETFs listed on the local exchange.

The instruments are CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF and Samsung Bitcoin Futures Active ETF, and all track the dynamics of futures exchange-traded funds traded on CME.

HSBC's introduction of crypto ETFs in Hong Kong is a major milestone for the sector, offering investors another regulated option to participate in the digital asset market through financial products.

This development is expected to have a broad impact on the global crypto market by not only reducing the perceived risks associated with crypto assets, but also potentially inspiring other financial institutions to explore similar offerings.

Furthermore, this move highlights the growing acknowledgement from forward-looking investors of the benefits that digital assets provide – namely diversification and high returns.

New-found institutional interest in digital assets was evident at this week’s HedgeWeek European Digital Assets Summit in London. Our team had the opportunity to engage with representatives from traditional hedge funds and fund of funds who, up until recently, have been skeptical about digital assets. The entry of major financial institutions into the space combined with heightened pressure from LPs to explore digital assets, are prompting these firms to seriously consider crypto for the very first time.

I think we can all agree that the increased presence of traditional hedge funds and FoFs at the crypto event speaks volumes about the legitimacy and growing acceptance of digital assets…

UK crypto, stablecoin rules receive Royal Assent, passing into law

There was massively promising news for the UK crypto ecosystem as a bill giving regulators the power to supervise digital assets and stablecoins was approved by King Charles on Thursday. This approval marks the final step in making the bill a law. Furthermore, the UK Economic Secretary to the Treasury indicated the possibility of introducing specific regulations for the industry within a year…

The passing of the Financial Services and Markets Act into law – hot on the heels of SEC bombshells – represents a huge stride forward towards the UK becoming a global hub for digital assets, and is a significant step in terms of providing much-needed regulatory clarity for crypto firms to operate in the country.

In recent months, the UK has already attracted several crypto firms (most notably a16z Crypto), and with this new act, we anticipate a surge of talent entering the country in the coming year.

Adding to the positive news for the UK crypto industry, the Law Commission of England and Wales unveiled its highly-anticipated final report on digital assets on Wednesday. Notably, the 300-page report recognises that crypto poses unique challenges that current laws do not adequately address. And as a result, the report proposes the introduction of a third category of personal property that can better recognise, accommodate and protect the unique features of digital assets. The commission also recommends establishing an expert panel to advise courts on legal matters related to digital assets.

At Blackstone Capital, we are highly impressed with this document and optimistic about the UK’s advancements in the digital asset sector. On a more personal note, as a UK- based crypto fund of funds, we are particularly delighted to see the UK solidifying its position as a digital asset hub in the West. Here’s hoping for progressive legislation across the world for digital assets!

Julius Baer heads to Dubai in first expansion of crypto ambitions

Julius Baer, a Swiss private bank that started offering Bitcoin and other crypto services to wealthy clients in May 2022, is now expanding its presence in Dubai. According to a recent Bloomberg report, the bank is planning to apply for a "digital assets license variation" to enhance its regulatory permissions in the emirate.

This move would mark Julius Baer's first expansion of its crypto services beyond Switzerland.

Julius Baer joins the growing list of Swiss private banks embracing the potential of crypto assets. Syz Bank, for instance, made waves last month by becoming the first banking group to introduce a crypto fund of funds. This move showcases the bank’s acknowledgment of the fund of funds approach as an excellent gateway into the nascent digital asset class.

Circling back to Julius Baer, the decision to tap into the Dubai market hasn’t come as a surprise to many industry observers. Over the past year, the city has become an attractive destination for crypto businesses, Thanks in part to the establishment of its Virtual Asset Regulatory Authority (VARA), the Emirate continues to attract major players in the crypto industry.

Separately Dubai also appears to be emerging as a global hub for hedge funds. According to a recent report by the Dubai International Finance Centre (DIFC) and Refinitiv, over 60 firms are currently in discussions to establish a presence in the city's financial centre. Notably, hedge fund giants such as Hudson Bay Capital Management, Millennium Management, Balyasny, and ExodusPoint recently opened offices in the region.

Roundup of other key developments

From Blockstone Capital

Blockstone Capital at the World Venture Forum If you're attending the World Venture Forum in Kitzbühel, Austria, from Monday July 3rd to Thursday July 8th, 2023, we encourage you to take the opportunity to meet our CEO, Carl Szantyr, who will be attending the event. Please feel free to directly contact Carl on Linkedin if you have any questions about our FoF.


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