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True Potential of Asian Crypto ETFs Yet to Be RealizedA recently published report by Hong Kong Exchanges and Clearing Ltd. (HKEX), the Hong Kong stock exchange, has found that crypto exchange traded funds (ETFs) have the potential to play a significant part in unlocking the next phase of digital asset expansion in Asia.©Pexels/Burak The WeekenderThe report, titled “Crypto ETF: Key to unlocking the next phase of digital asset growth in Asia,” highlights how crypto ETFs could attract more institutional investors and lead to increased liquidity in the digital asset market. Furthermore, HKEX claims that the ETF investment mechanism can play its part in offering a more regulated and safe manner through which investors can gain exposure to digital assets.Regulatory progressWhile the report cites an Asian regulatory environment that is becoming increasingly more supportive of digital assets of late, it still identifies a need for further progress to be made to improve the level of regulatory clarity and to provide a truly standardized approach to digital assets. That, it says, will result in crypto ETFs becoming more accessible, offering a diversified way in which the investor can access and gain exposure to digital assets in Asia.Nonetheless, HKEX applauds the work done thus far by regulatory authorities in Hong Kong and Singapore, where regulatory frameworks relative to crypto ETFs have been implemented. Those are measures that the Hong Kong stock exchange believes will increase investor confidence, and in turn, bring about further adoption of digital assets.Modest daily trading volumeBetween December 16 and February 7 the two Bitcoin ETFs and one Ether ETF listed on the Hong Kong stock exchange achieved a daily trading volume of $1.19 million. That’s rather underwhelming when compared with the $3 billion in daily volume being achieved by the Chicago Mercantile Exchange (CME) relative to its Bitcoin and Ether futures ETF in the United States. On the New York stock exchange ProShares Bitcoin Strategy ETF achieves a daily average trading volume of $196 million.These findings are a bit counter-intuitive given the contrasting regulatory approaches in the two territories. In the US, regulators have failed to approve a physically settled Bitcoin ETF. Furthermore, the Securities and Exchange Commission (SEC) has denied the attempts of Grayscale Bitcoin Investment Trust (GBTC) to convert the Bitcoin fund into an ETF. Meanwhile, Hong Kong has much more regulatory clarity but yet trading volume in crypto-related ETFs remains minuscule by comparison with the United States.Despite that, the report remains upbeat with regard to what can be achieved in the market with crypto-related ETFs. It makes a case for crypto ETFs as a means for traditional financial institutions to enter the digital assets market with relative ease. Similarly, it sees a role for global stock exchanges in facilitating future growth of crypto-related ETFs and in developing new ETF products that could unlock access to specific digital assets or bespoke investment strategies.

Pakistan’s Ministry of Finance has signed off on the establishment of the Pakistan Digital Assets Authority (PDAA), a body which will be responsible for the implementation of regulations governing blockchain and the digital assets sector. In a report published by Pakistani English-language newspaper Dawn, the media outlet outlined that the Ministry of Finance has taken this step in an effort to embrace future innovation in the finance sector.  The new agency will be responsible for monitoring the operations of digital wallet service providers, stablecoin issuers, the development firms behind decentralized finance (DeFi) protocols, crypto custodians and crypto exchange platforms. Photo by Hamid Roshaan on UnsplashFrom crypto ban to crypto regulationIn October 2022, Pakistan was removed by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog, from its grey list. The following year, Pakistan’s Minister of State for Finance and Revenue, Aisha Ghaus Pasha outlined that banning cryptocurrency was a condition of the country’s removal from the FATF grey list. Accordingly, the South Asian country proceeded to ban digital assets, with Ghaus Pasha declaring that crypto would “never be legalized in Pakistan.”Despite the adverse position taken previously by the authorities in Pakistan where digital assets were concerned, in 2024 a survey carried out by Chainalysis revealed that Pakistan featured strongly in terms of retail-level crypto adoption. With this latest development, Pakistan is moving forward progressively with digital assets, albeit that it is doing so while being cognizant of the current requirements demanded by FATF related to crypto. The newly-formed PDAA will act to ensure FATF-compliant innovation, while striving for economic inclusion and the adoption of digital assets in a responsible manner. Regulating to lead crypto innovation rather than catching upPakistan’s current Minister for Finance and Revenue, Muhammad Aurangzeb, said that “Pakistan must regulate not just to catch up — but to lead.” He added that through the establishment of the PDAA, a digital assets regulatory framework that protects consumers will be created. Furthermore, he claimed that such an approach would attract global investment, putting Pakistan “at the forefront of financial innovation.”Another area of focus for the PDAA will be the facilitation of the tokenization of government debt and national assets. Pakistan runs an annual average electricity surplus of 4,000 megawatts. In 2024, total electricity generation was recorded at 92,091 GWh while demand weighed in at 68,559 GWh. With that, the Pakistani authorities want the PDAA to create the correct conditions that will lead to regulated Bitcoin mining operators utilizing this energy resource. Other objectives which have been set out for the new agency include encouraging the growth of startups aimed at building blockchain-based solutions at scale, the regulation of what is estimated to be a $25 billion informal crypto market and the provision of legal clarity within the crypto sector in Pakistan for both local and international investors. This latest positive development follows the formation of the Pakistan Crypto Council (PCC) back in February. That event signaled a policy shift in Pakistan with regard to digital assets. In March PCC CEO Bilal bin Saqib said that Pakistan was done sitting on the sidelines and that the authorities now want to see Pakistan develop as a “leader in blockchain-powered finance.”

Bhutan Quietly Mining Bitcoin Since $5,000The tiny nation of Bhutan continues to be full of surprises recently where crypto is concerned, with the latest report suggesting that the kingdom has been mining bitcoin for a number of years already.© Pexels/Pema GyamtshoAccording to a recent report in The Bhutanese, a Bhutan-based publication led by investigative journalist, Tenzing Lamsing, the landlocked nation had been mining bitcoin over the course of a “few years” already, in an effort to diversify its sovereign portfolio.Long-term investment strategyUjjwal Deep Dahal, CEO of Druk Holding and Investments (DHI), told the publication that the venture was part of a long-term investment strategy. DHI is the commercial arm of the Royal Government of Bhutan. It was formed pursuant to a Royal Charter in 2007 with the mandate of making investments on behalf of Bhutan while optimizing usage of resources.The mining activity had centered on Bitcoin although there was a small provision for Ethereum-based mining when Ethereum was a mineable proof-of-work (PoW)-based blockchain network. It’s unclear of the precise timeline but the report outlines that DHI has engaged in the mining space over a number of years, and at a time in which the Bitcoin unit price was as low as $5,000.Exploiting cheap hydroNestled in the Himalayas, Bhutan has considerable hydroelectric resources. Bitcoin mining is ordinarily an expensive exercise but in scenarios where there are plentiful energy resources with a marginally cheaper cost of production than the average, it can be an attractive and profitable enterprise. Dahal outlined that these conditions enabled DHI to reinvest profits back into additional mining equipment.The precise time-frame of DHIs entry into Bitcoin mining is open to speculation. However, we do know that the Bitcoin unit price was last below $5,000 at the onset of the pandemic in March 2020. Prior to that, Bitcoin had risen above $5,000 in April 2019 following an acute bear market in 2018.Crypto lender entanglementsBhutan and DHI hit the crypto radar last month when it was revealed that the kingdom had made significant investments into and out of failed crypto lenders Celsius and BlockFi. Dahal has said that the royal charter-mandated firm had taken out loans with both crypto lenders and had fully repaid those loans. However, that may have been something that happened later than anticipated. The Bhutanese company had a $30 million loan from BlockFi. BlockFi liquidated the Bitcoin collateral associated with that loan in 2022 but it left a shortfall of $800,000. The failed lender subsequently sued DHI. As of an April 13 court filing, BlockFi submitted a voluntary dismissal of the lawsuit to the courts, presumably because the shortfall was subsequently paid by DHI.In the case of Celsius, DHI had withdrawn $65 million from the lending platform prior to it declaring bankruptcy. Consequently, the matter has been the subject of speculation relative to the potential for the Celsius bankruptcy estate to pursue DHI for a clawback of the withdrawn funds.