As a seasoned crypto investor with experience in navigating the Asian market, I find the recent launch of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong an intriguing development. While the initial trading volume was modest compared to its US counterpart, the proximity of Hong Kong to China has sparked intense discussions about potential accessibility for mainland Chinese investors.
Last week’s introduction of Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) in Hong Kong provides Asian investors with fresh opportunities to trade these cryptocurrencies.
The initial week of trading for Hong Kong’s ETFs showed tepid results in contrast to their counterparts in the US. However, due to its close proximity to China, Hong Kong has emerged as a significant topic of debate regarding the potential accessibility of these spot ETFs to investors based in the mainland.
Richard Byworth, the managing partner at SyzCapital and a Bitcoiner, has fueled speculation with his remarks, implying that Bitcoin Exchange-Traded Funds (ETFs) based in Hong Kong may become available for investment by mainland Chinese investors in the near future.
In his interaction with Samson Mow, Byworth mentioned rumors he had come across regarding the potential addition of a Bitcoin ETF at Spot to Stock Connect.
As a researcher studying the financial markets, I would describe Stock Connect as a platform that enables me, as a qualified investor, to access a predetermined number of shares in another market. For instance, the Shenzhen-Hong Kong Stock Connect bridges the Shenzhen Stock Exchange and the Hong Kong Stock Exchange, granting me the opportunity to invest in eligible stocks from both markets.
Investors in one market have the option to work with their domestic brokers and clearinghouses to buy shares in the other market through the Stock Connect program. This program offers access to a broad selection of stocks, but it’s important to note that there is a daily limit to usage.
Although Byworth’s statements are still just speculation, China’s position against cryptocurrency has sparked lively debates on various social media platforms.
Brian HoonJong Paik, the co-founder and COO at SmashFi, spoke out regarding speculations that mainland Chinese investors might be able to invest in Hong Kong ETFs soon.
According to him, approximately 70% of China’s affluence is invested in real estate, and there are reportedly 100 million vacant homes within the country. To prevent potential social instability, the Chinese Communist Party (CCP) is seeking a diverse range of assets as an alternative investment.
As a market analyst, I’ve come across Paik’s post where he discussed various investment avenues enabling Chinese investors to purchase spot Bitcoin Exchange-Traded Funds (ETFs) in the Hong Kong market.
For institutions in China that meet the qualifications, such as banks, funds, and insurance companies, the QDII scheme provides an avenue for investing in international stock markets, with Hong Kong being one of the options. In addition to Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects, this scheme enables them to diversify their portfolios beyond China’s borders.
An arrangement known as Mutual Recognition of Funds (MRF) between Hong Kong and Mainland China permits qualified investment funds from both regions to be distributed and sold in each other’s financial markets.
In the year 2021, China implemented a prohibition against Bitcoin mining and transactions through foreign cryptocurrency exchanges for residents in the mainland. Surprisingly, Chinese courts have ruled that Bitcoins are considered legal property in certain jurisdictions within the country.
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2024-05-06 13:29