According to data analyst Jack Wang from Bloomberg, the recent approval of spot Ethereum and Bitcoin ETFs in Hong Kong will not grant access to mainland Chinese investors. Despite this regulatory approval, three Chinese asset managers—China Asset Management, Harvest Global Investments, and Bosera—launched their spot crypto ETFs through their Hong Kong subsidiaries on April 30. While this is a significant step in expanding cryptocurrency investment vehicles in Hong Kong, mainland Chinese investors are still unable to participate in these offerings.
Wang emphasized during a Bloomberg webinar on April 24 that mainland Chinese citizens are prohibited from accessing Bitcoin or Ether exposure due to a directive from the Chinese State Council issued in September 2021. This directive forbids financial institutions from creating accounts, transferring funds, or providing clearing services for crypto-related transactions.
Wang shared his personal experience of attempting to engage with a futures-based crypto ETF listed in Hong Kong, but brokers rejected his trade attempt. He stated that Chinese investors will likely remain isolated from this product in the short term. Wang firmly believes that the introduction of spot Ether and Bitcoin ETFs in Hong Kong will not have a positive impact on mainland China’s regulatory stance or open the cryptocurrency market to Chinese investors.
Thomas Zhu, head of digital assets at China Asset Management, noted that the possibility for mainland Chinese investors to access crypto ETFs in Hong Kong depends on potential regulatory changes in the future.
Since 2014, regulators from mainland China and Hong Kong have collaborated to establish the Mainland-Hong Kong Stock Connect. This initiative allows mainland investors to directly trade eligible stocks and ETFs listed in Hong Kong, demonstrating a trend toward greater financial integration between the two regions.
As Hong Kong prepares to introduce spot Bitcoin ETFs, optimism is growing within the financial community. Bloomberg analyst James Seyffart highlighted the significant difference in scale between the American and Hong Kong ETF markets. While the US ETF market has nearly $9 trillion in assets, Hong Kong’s entire ETF market is valued at approximately $50 billion, with mainland China’s ETF market being considerably larger at around $325 billion.
Despite challenges in the broader market and China’s strict regulations, Hong Kong is positioning itself as a major hub for the cryptocurrency market. It has opened up crypto trading to retail investors and granted exchange licenses to companies like HashKey and OSL Digital Securities. The Hong Kong Securities and Futures Commission is also finalizing rules that would allow retail investors to trade major cryptocurrencies on licensed exchanges. These progressive regulations in Hong Kong contrast with mainland China’s prohibitive stance on cryptocurrencies.
While mainland China maintains its strict regulations, Hong Kong’s approach may set a precedent or act as a test bed for potential future policies in China.
