After the listing of the Hong Kong cryptocurrency spot ETF, Chinese investors have been prohibited from investing. However, Han Tongli, CEO of China Asset Management Company, one of the first issuers of cryptocurrency spot ETFs in Hong Kong, stated on Thursday that in the future, it is not ruled out that Chinese investors will be able to directly invest in their Bitcoin and Ethereum spot ETF products through the Shanghai-Hong Kong Stock Connect program.
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China Asset Management Company is one of the three major issuers of Bitcoin and Ethereum spot ETFs in Hong Kong. Han Tongli, its CEO, stated to the South China Morning Post during the Bitcoin Asia Summit that if everything goes smoothly in the next two years, the company does not rule out applying to include its cryptocurrency spot ETF in the Shanghai-Hong Kong Stock Connect program.
The mechanism for the ETF mutual access between China and Hong Kong was launched in May 2022, allowing Chinese investors to access a series of designated ETFs listed in Hong Kong. It is part of a larger-scale Shanghai-Hong Kong Stock Connect program. It is understood that the Shanghai-Hong Kong Stock Connect was launched in 2014 and is a market connectivity program between mainland China and Hong Kong.
If it is possible to include cryptocurrency ETFs in the Shanghai-Hong Kong Stock Connect, it is expected to bring significant confidence and attract a large number of new investors to the market. However, considering China’s hostile position towards cryptocurrencies, some people question whether this move will be approved. Although individual trading and holding of cryptocurrencies still exist in a legal gray area in mainland China, most commercial cryptocurrency activities are prohibited.
The Bitcoin and Ethereum futures ETFs launched in Hong Kong in 2022 have not yet been included in the Shanghai-Hong Kong Stock Connect program.
Optimistic about the scale of Hong Kong’s cryptocurrency ETF reaching twice that of the United States
Hong Kong became the first region in Asia to launch Bitcoin and Ethereum spot ETFs last month. Issuers have heavily promoted advantages such as physical subscriptions for Hong Kong products. However, given that the Hong Kong ETF market is much smaller than that of the United States, the trading volume of related ETFs is negligible compared to the Bitcoin ETF launched in the United States in January.
Han Tongli said that many people are adopting a wait-and-see attitude and doubt Hong Kong’s commitment to the virtual asset industry, which has affected the trading volume of related ETFs. However, he believes that the Hong Kong market has greater potential because Hong Kong is more attractive in Asia and is a “more neutral” region. It is expected that Hong Kong’s cryptocurrency ETF may eventually develop to a scale twice that of American products.
Han Tongli refused to provide a timetable for achieving this milestone. He stated that it depends on when Hong Kong can establish a complete virtual asset ecosystem. The launch of ETFs in Hong Kong has already planted the seeds, but other products such as stablecoins require more time to obtain regulatory approval.
According to Han Tongli, China Asset Management Company’s current goal is to make its cryptocurrency spot ETF the largest ETF in terms of trading volume in Hong Kong by the end of this year, as the company is preparing to issue ETF-based mortgage finance products.