The CEO of Harvest, a Hong Kong-based company that issues a Bitcoin exchange-traded fund (ETF), is exploring ways to make its Bitcoin and Ether ETFs accessible to investors in mainland China. Han Tongli is considering offering Harvest’s products through Hong Kong’s ETF Connect framework, according to a report by the South China Morning Post on May 9.
ETF Connect, which was launched in 2022 and approved by the China Securities Regulatory Commission and the Securities and Futures Commission, aims to facilitate interaction and integration between Hong Kong and mainland China, provide diverse asset allocation options, and promote liquidity.
Han stated that if everything goes smoothly in the next two years, Harvest may apply for its ETFs to be included in ETF Connect. The potential inclusion of Bitcoin and Ether ETFs in the program could have a significant positive impact on cryptocurrency markets, as China has a large pool of investors. However, it remains to be seen whether the Chinese government will embrace this opportunity, considering its historically restrictive stance on cryptocurrencies like Bitcoin.
According to the South China Morning Post, Hong Kong’s Bitcoin and Ether futures-based ETFs, which were launched in 2022, have not been included in the Stock Connect program.
The ability of Hong Kong to offer mainland Chinese investors a Bitcoin ETF has been a topic of interest even before the launch of Bitcoin and Ether ETFs in Hong Kong on April 30. Many industry analysts did not expect significant market activity from the launch due to the relatively smaller size of the Hong Kong ETF market compared to the United States and mainland China.
Data from Bloomberg shows that Hong Kong-based subsidiaries of mainland Chinese companies have 1,400% more assets in the mainland Chinese market than in the local market. It is estimated that all Hong Kong ETFs account for only 0.6% of the U.S. ETF market.
In other news, Binance, a cryptocurrency exchange, has responded to the Wall Street Journal’s article claiming that Hong Kong’s crypto ETFs have attracted the equivalent of $50 billion. Binance has called the report misleading and clarified that the figure refers to the total trading volume of all cryptocurrencies on the exchange, not the inflow of funds into the ETFs.
Overall, Harvest’s plans to make its Bitcoin and Ether ETFs available to mainland Chinese investors through Hong Kong’s ETF Connect framework could have significant implications for the cryptocurrency market, but it remains to be seen whether the Chinese government will embrace this opportunity.