Hong Kong’s Crypto ETFs: Pioneering Paths Amidst Chinese Investment Limits

Crypto News- When Hong Kong gave the green light for spot Bitcoin and Ether ETFs on April 15, the question on everyone’s mind was whether mainland Chinese investors could join the game.

Hong Kong’s Crypto ETFs: Pioneering Paths Amidst Chinese Investment Limits

The implications are massive. Since 2021, Chinese crypto enthusiasts have been sidelined due to regulatory barriers. But if they can now access these ETFs, it could unleash a flood of liquidity into the market.

Alessio Quaglini, CEO of Hex Trust, sees the potential for billions in demand. “China’s recent interest in alternative assets, like gold, hints at a possible appetite for Bitcoin exposure,” he remarked to DL News.

However, there’s a catch. Will Chinese restrictions on crypto extend to these ETFs? If not, we could witness a surge of new investment. But that’s uncertain territory. The process of implementation is just beginning.

Eric Balchunas Casts Doubt on Mainland China’s Crypto ETF Appetite

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, doubts China’s openness to this speculation avenue. He warned investors not to expect a substantial inflow from mainland China, estimating they might be lucky to see $500 million.

Even if mainlanders are excluded, these ETFs still have strong ties to China. The approved providers—Harvest Global, Bosera, and China Asset Management—are mainland companies with Hong Kong presence. Harvest Global, for instance, received ETF approval despite downsizing its Hong Kong operations earlier this year.

Yet, overcoming restrictions won’t be new for Chinese investors. Despite previous hurdles, between July 2022 and June 2023, the Chinese market saw $86.4 billion in crypto transactions, according to Chainalysis.

The ETF providers’ approval indicates a level of tolerance from the mainland. But whether local Chinese citizens will have access remains uncertain, as HB Lim, managing director APAC at BitGo, noted, “It’s a strong signal, but opening it up for local trading is a different matter altogether.”