The introduction of Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) in Hong Kong on April 30 has opened up new opportunities for traders in Asia.
Although the first week of trading for these spot ETFs in Hong Kong was not as successful as their counterparts in the United States, the proximity of Hong Kong to China has sparked discussions about whether mainland Chinese investors will be able to access these ETFs.
Richard Byworth, managing partner at SyzCapital and BTC investor, has sparked rumors with his recent comments, suggesting that Bitcoin ETFs listed in Hong Kong may soon be accessible to investors from mainland China.
Byworth, in response to Samson Mow, stated that he had heard talks about the spot BTC ETF being added to Stock Connect.
Stock Connect allows qualified investors from one market to access eligible shares in another market, with 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. The Stock Connect program covers a wide range of stocks but is subject to a daily quota.
While Byworth’s comments are merely 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 about mainland Chinese investors potentially accessing the Hong Kong ETFs in the near future.
He mentioned that 70% of Chinese wealth is in real estate and that “there are now 100 million empty homes. The CCP [Chinese Communist Party] needs an alternative asset to mitigate social unrest.”
In another post, Paik listed several trade arrangements between the Shanghai and Hong Kong markets that could allow Chinese investors to invest in spot BTC ETFs in Hong Kong.
In addition to the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the Qualified Domestic Institutional Investor scheme allows qualified Chinese institutional investors, such as banks, funds, and insurance companies, to invest in overseas markets, including Hong Kong.
Another trade agreement, the mutual recognition of funds, between Hong Kong and mainland China allows eligible mainland and Hong Kong funds to be distributed in each other’s markets.
China banned Bitcoin mining and foreign crypto exchanges from offering their services to mainland customers in 2021. However, despite the blanket ban on crypto-related businesses and services, Chinese courts have recognized BTC as legal property in several jurisdictions.
Web3 Gamer:
Web3 gaming won’t exist in 5 years, $656K for best crypto game pitch