The introduction of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong on April 30 has stirred discussions among Asian traders about potential accessibility for mainland Chinese investors.
While the initial week of trading for these Hong Kong-based spot ETFs saw relatively subdued activity compared to their counterparts in the United States, the proximity of Hong Kong to mainland China has fueled speculation about mainland investors accessing these ETFs.
Richard Byworth, managing partner at SyzCapital and a Bitcoin investor, has added fuel to the fire with remarks hinting at the possibility of Bitcoin ETFs listed in Hong Kong becoming available to mainland Chinese investors. Byworth’s comments, made in response to Samson Mow on X, suggested that talks were underway to include spot BTC ETFs in the Stock Connect program.
The Stock Connect program facilitates cross-border investment between mainland China and Hong Kong, enabling qualified investors in one market to access eligible shares in the other. This program covers various stocks and is subject to a daily quota.
While Byworth’s remarks remain speculative, China’s stringent stance on cryptocurrencies has made the topic a focal point of discussion on social media platforms. Brian HoonJong Paik, co-founder and chief operating officer at SmashFi, also weighed in on the speculation, suggesting potential reasons behind China’s interest in alternative assets like Bitcoin ETFs.
Paik highlighted China’s significant investment in real estate, with a considerable number of properties lying vacant. He suggested that the Chinese Communist Party might view alternative assets like Bitcoin ETFs as a means to diversify wealth and mitigate social unrest.
Additionally, Paik outlined several existing trade arrangements between the Shanghai and Hong Kong markets that could potentially facilitate mainland Chinese investors’ access to spot BTC ETFs in Hong Kong. These include the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, and the Qualified Domestic Institutional Investor scheme.
Despite China’s stringent regulatory measures, which included banning Bitcoin mining and restricting foreign crypto exchanges from serving mainland customers in 2021, Chinese courts have recognized Bitcoin as legal property in various jurisdictions, adding complexity to the landscape of cryptocurrency regulation in the country.
