Hong Kong Bitcoin ETF will be opened to mainland China

On May 11, Harvest Global Investments, Hong Kong’s first issuer of virtual currency ETFs, plans to open Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) to Chinese investors through Hong Kong stocks. Harvest Fund CEO Han Tongli revealed that if progress goes well in the next two years, he will not rule out applying to include his ETFs in the interconnection plan.

It is reported that if this measure is implemented, it will be the first time that Chinese investors can invest in virtual currency ETFs through formal channels. According to "Bitcoin Insider", this move marks an important step for Hong Kong in promoting the development of the virtual currency market, and also reflects the further deepening of the opening up of China's capital market.

On May 9, 2024, the Hong Kong spot Bitcoin and Ethereum exchange-traded fund panel discussion was successfully held, with Han Tongli, CEO of Harvest Global Investments, attending.

Chinese fund house Harvest Global Investments, one of three issuers of Hong Kong’s first spot cryptocurrency exchange-traded funds (ETFs), is already considering allowing mainland investors direct access to it in the future through the ETF Connect program. Bitcoin and Ethereum products. According to the company’s CEO.

As long as “all goes well” over the next two years, Harvest “doesn’t rule out” applying to include its ETF that directly invests in crypto tokens in the interconnection scheme connecting mainland China and Hong Kong exchanges, Harvest CEO and The company’s chief investment officer told The Washington Post on the sidelines of the Bitcoin Asia conference.

Harvest Global Investment CEO Han Tongli (centre) at the Hong Kong Spot Bitcoin and Ethereum ETF Panel at Bitcoin Asia on May 9, 2024 Speak in the discussion. Photo: SCMP/Matt Haldane

ETF Connect, launched in May 2022, allows mainland investors to invest in a selection of Hong Kong-listed ETFs. It is part of the larger Shanghai-Hong Kong Stock Connect scheme launched in 2014, which first linked the Hong Kong and Shanghai stock exchanges.

The inclusion of crypto ETFs in the scheme could be a significant boost to market confidence and provide a flood of new investors in the emerging product. Some have questioned whether their inclusion would be allowed given Beijing's hostile stance toward cryptocurrencies. Most commercial crypto activities are banned in mainland China, although transactions and ownership between individuals remain an ongoing legal issue.

Hong Kong’s Bitcoin and Ethereum futures ETFs to be launched in 2022 have not yet been included in Shanghai-Hong Kong Stock Connect.

Hong Kong’s Bitcoin and Ethereum spot ETF is the first of its kind in Asia, having debuted last week and hailed as a major step in Hong Kong’s efforts to become a cryptocurrency hub.

The company promotes the advantages of Hong Kong products, including so-called physical subscriptions, or direct purchases of ETFs with Bitcoin and Ethereum. Fund managers use incentives to drive investment, such as waiving management fees for a specific period.

However, many viewed the debut as a disappointment, as trading volume represented only a fraction of the volume of the U.S. Bitcoin ETF launched in January. The ETF market in Hong Kong is much smaller than that in the United States.

Doubtful about Hong Kong’s commitment to the virtual asset sector, many people have chosen a wait-and-see approach, which has put pressure on ETF trading volumes, Han said, adding that he expected the products to “start slowly” ".

“People are still skeptical about Hong Kong’s status as a special [administrative] region,” Han said during a Bitcoin Asia panel discussion. "It's located in China... For whatever reason, many people don't want to see Hong Kong become more successful."

But Han believes that the Hong Kong market has greater potential because it is a "more neutral" region, with Asia being more attractive, he said local crypto ETFs could grow to twice the size of U.S. products.

Han declined to give a timetable for when he thought the milestone would be reached. He said it depends on when Hong Kong can establish a complete virtual asset ecosystem, but Hong Kong has already "sowed the seeds" by launching ETFs. He added that other products such as stablecoins will take more time to gain regulatory approval.

Han said Harvest now aims to make its spot crypto ETF the largest exchange in Hong Kong by volume by the end of this year as the company prepares to launch ETF-based mortgage financial products.

Spot crypto ETFs were a major topic at the two-day Bitcoin Asia conference, which kicked off on Thursday at Hong Kong’s Kai Tak Cruise Terminal. Legislator Johnny Ng, known for his pro-crypto stance, commented at the event's opening, calling the new financial products "an important milestone in the development of Hong Kong's ETF market."

On April 30, Harvest’s spot crypto ETF ranked second in first-day trading volume among the three companies offering such ETFs. China Asset Management Company (ChinaAMC) is the largest.

Source: South China Morning Post

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