The recent launch of Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) in Hong Kong has opened up new opportunities for Asian traders. Although the initial trading week for the spot ETFs in Hong Kong was not as impressive as their counterparts in the United States, the proximity of Hong Kong to China has sparked discussions about whether mainland Chinese investors will have access to these ETFs.
Richard Byworth, managing partner at SyzCapital and BTC investor, has fueled rumors by suggesting that Bitcoin ETFs listed in Hong Kong may soon be accessible to investors from mainland China. In response to Samson Mow, Byworth mentioned that he had heard talks about the spot BTC ETF being added to Stock Connect.
Stock Connect is a program that allows qualified investors from one market to trade eligible shares in another market, subject to a set quota. The Shenzhen-Hong Kong Stock Connect, a cross-border investment route, connects the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. Investors in either market can use their local brokers and clearing houses to trade shares in the other market, though there is a daily quota.
While Byworth’s remarks are currently just rumors, China’s anti-crypto stance has made it a topic of discussion on social media. Brian HoonJong Paik, co-founder and chief operating officer at SmashFi, also addressed the rumors and the possibility of mainland Chinese investors accessing the Hong Kong ETFs in the future. He highlighted that 70% of Chinese wealth is invested in real estate and suggested that an alternative asset like Bitcoin could help mitigate social unrest.
Paik listed several trade arrangements between Shanghai and Hong Kong markets that could potentially enable Chinese investors to invest in spot BTC ETFs in Hong Kong. These include the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and the Qualified Domestic Institutional Investor scheme, through which qualified Chinese institutional investors can invest in overseas markets.
Despite China’s ban on Bitcoin mining and foreign crypto exchanges offering services to mainland customers, Chinese courts have recognized BTC as legal property in several jurisdictions. This further adds to the discussion surrounding the accessibility of Bitcoin ETFs to mainland Chinese investors.
Overall, the launch of spot Bitcoin and Ether ETFs in Hong Kong has sparked speculation about the possibility of mainland Chinese investors gaining access to these investment opportunities. While the discussions are based on rumors and possibilities, they highlight the growing interest and potential impact of these ETFs in the Asian market.