In the heart of Hong Kong’s Central district, the initial buzz surrounding the cryptocurrency market has settled into a more subdued atmosphere. Yip Yat Chau, a seasoned professional with over six years of experience in crypto trading, finds this quieter environment more authentic and conducive to serious business. As the managing director of Aplo Capital Management Limited, he leads the only compliant crypto-focused hedge fund currently operating in Hong Kong and one of the top-performing entities under the city’s virtual asset regulatory framework.
Hong Kong has approved 11 funds to engage in virtual currency investments. Among these, Yip’s fund stands out as the sole performer that has consistently outperformed the market. In 2022, a year marked by extreme volatility and high-profile collapses in the crypto industry, his team achieved a net return of 9.2%, earning them third place in Barclays’ ranking of cryptocurrency funds by net收益—all while many competitors faced losses approaching 50%.
By the end of 2022, the fund distributed approximately HK$70 million in dividends to its limited partners (LPs). This success has drawn attention from around the globe. During one particularly active week in April, Yip met with more than 50 groups of international visitors—from the U.S., U.K., mainland China, Singapore, and Dubai—all exploring crypto opportunities in Hong Kong.
Many saw the city as a potential hub for “digital nomads,” especially after the severe market downturn of 2022. That year witnessed the collapse of Luna, a major stablecoin, and the bankruptcy of FTX, one of the largest crypto exchanges. Bitcoin’s value plummeted from nearly $40,000 in early May to around $16,000 by year-end.
However, Yip emphasizes that Hong Kong is not a suitable base for everyone in the crypto space. It is particularly well-suited, he believes, for those with strong traditional finance backgrounds who can navigate regulated environments intelligently.
A Traditional Finance Professional in the Crypto World
Unlike many crypto traders who come from informal or self-taught backgrounds, Yip is a “regular army” trader with roots in Wall Street. After earning a degree from Columbia Business School, he joined Fore Research & Management, a well-known hedge fund, where he specialized in convertible bond arbitrage.
He returned to Hong Kong in 2014 and worked at a local equity hedge fund. Around this time, he began investing in Bitcoin out of personal interest. As regulatory frameworks for crypto were still unclear, Yip and his partners started engaging in large-scale secondary market Bitcoin trading as early as 2017. He later left his institutional role to establish Aplo Capital Management.
Yip points out that many strategies from traditional finance—such as fundamental analysis, quantitative models, and event-driven approaches—can be directly applied to cryptocurrency trading. In fact, he finds crypto trading relatively easier due to the high number of retail participants who lack professional training. This creates what he calls a “cognitive gap,” where skilled traders can capitalize on less experienced counterparts.
In the 24/7 global crypto market, traders from around the world engage with the same assets but employ vastly different strategies and logic. This environment offers abundant opportunities for professionals—far more than those typically available in traditional finance.
The Path to Compliance and Institutional Adoption
Yip was among the first in Hong Kong to apply for a cryptocurrency fund license, which he obtained in early 2022. By early 2023, his firm became the first investment agency in the city permitted to conduct multi-strategy crypto trading—effectively operating as a hedge fund within the regulatory framework.
The licensing process involved rigorous scrutiny of the fund manager’s capabilities, risk management protocols, investor protection measures, and historical trading behavior. While Hong Kong has many funds operating with private capital or investments from friends, only a handful have pursued full compliance. Aplo Capital is the only one among the approved funds with a complete fiscal year of trading records from early 2022 onward.
From the outset, Yip and his team committed to a regulated approach. This aligns with their goal of attracting institutional investors. Current investors include high-net-worth individuals, such as Huobi Group founder Lin Li, as well as the fund’s own capital.
Yip has also engaged with old-money families in Hong Kong and top-tier private banks to explore product distribution channels. He prefers working with institutions and family offices, describing it as a “batch” approach to reaching affluent audiences efficiently.
However, major private banks—which serve the majority of wealthy individuals in Hong Kong and mainland China—have strict requirements for fund inclusion. They typically demand at least three years of verifiable track records, robust compliance, and reliable strategies. Since the longest available record in Hong Kong is currently around 1.5 years, Yip and others must wait before qualifying for these platforms.
Some Chinese-funded financial institutions are actively accelerating the inclusion of crypto funds. Wealthy investors in Hong Kong have expressed interest in regulated crypto products, especially after experiencing losses in the previously wild and unregulated crypto markets. Many are now looking to trusted institutions for structured asset allocation.
Frequently Asked Questions
What makes a crypto hedge fund “compliant” in Hong Kong?
A compliant crypto hedge fund operates under regulatory oversight, meeting specific standards for risk management, reporting, and investor protection. It requires licensing from authorities, ensuring transparency and adherence to legal frameworks.
How do traditional finance strategies apply to cryptocurrency trading?
Methods like arbitrage, quantitative analysis, and event-driven trading are directly transferable. The crypto market’s high volatility and retail participation often provide even greater opportunities for skilled traders.
Why are institutional investors cautious about crypto funds?
Institutions prioritize stability, compliance, and proven track records. Many require several years of performance data and rigorous risk controls before investing, which is challenging in the emerging regulated crypto fund sector.
Why did this fund perform well during a market crash?
The fund’s success stemmed from disciplined risk management, strategic diversification, and leveraging market inefficiencies. Their professional background enabled them to capitalize on volatility rather than succumb to it.
Why do most crypto funds in Hong Kong avoid regulation?
Many funds use private capital or operate informally, avoiding the complexity and cost of compliance. However, this limits their access to institutional capital and broader investor trust.
Why target high-net-worth individuals and families?
Wealthy investors seek diversification and innovative asset classes. Compliant crypto funds offer a structured way to gain exposure, managed by professionals with proven strategies. For those looking to explore secure crypto investment avenues, discover professional crypto asset management.
The evolution of Hong Kong’s crypto landscape reflects a broader shift toward legitimacy and institutional participation. For trained professionals like Yip Yat Chau, regulation is not a barrier but an advantage—a way to build trust and scale within the global financial ecosystem.