Bitfire Group launches Hong Kong’s first compliant crypto asset quantitative strategy

Digital financial services firm Bitfire Group launched Hong Kong’s first compliant crypto asset quantitative strategy and expanded its full-stack real-world assets (RWA) operator business this week.

The strategy leverages funding rate, basis, stablecoin and staking as core mediums. RWA is expected to add more arbitrage opportunities across AI-related assets and crypto assets, enabling clients to gain potential structured and diversified returns tied to AI and crypto assets.

Xinghua Luo, senior director of asset management at Bitfire, told FOW that the product operates as a fund and separately managed account (SMA) that are approved by Hong Kong’s Securities and Futures Commission (SFC).

“The quantitative strategy is unique in that it can offer multiple arbitrage opportunities on underlying products such as perpetuals, futures, stablecoins and US equities on the most liquid exchanges,” said Luo.

Looking back at securing approval for the product, Luo said that its partner digital asset exchanges' licences in the UAE made the process easier.

“For licences in offshore jurisdictions such as the BVI and Cayman Islands, it’s insufficient for the SFC,” said Luo. “Hong Kong has signed memoranda of understanding with jurisdictions such as the UAE in the Middle East so that offers a great foundation.”

Another consideration for the SFC was looking at the firm’s risk control, particularly on the responsible officer and the firm’s management’s experience in crypto asset management.

Luo said that Hong Kong is a core jurisdiction for the product given the wide sales network locally while Singapore and Japan also offer ample opportunities.

The firm also aims to target external managers in South Korea, the UK and other European countries seeking more actively managed products.

Looking ahead, Luo expects the virtual asset licensing regime coming into place in Hong Kong later this year as well as the momentum building around the passage of the Clarity Act in the US to drive further interest in more actively managed crypto products.

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PopDEX in July said it will work with Morph blockchain network to improve infrastructure for onchain derivatives, with a focus on execution quality, liquidity and capital efficiency across the Morph ecosystem.