- Spot Bitcoin (BTC) exchange-traded funds (ETFs) will start trading in Hong Kong (HK) on April 30.
- Mainland Chinese citizens are barred from participating in the market due to the ongoing ban within the central government.
China’s Bitcoin Ban Leaves Mainland Investors on the Sidelines
The cryptocurrency industry is bracing itself for the potential inflow of funds from the upcoming spot Bitcoin ETFs in Hong Kong. Despite HK’s status as China’s Special Administrative Region (SAR), mainland Chinese investors remain left out of the opportunity to participate in the market.
Amid the excitement building around the entry of the HK arms of giant Chinese fund managers in the cryptocurrency ecosystem like China AMC, Harvest Fund, and Bosera is the ongoing Bitcoin and crypto ban in mainland China going all the way back to 2021. It should be noted that the prohibition stems from the decision of the Chinese Central Government that virtual currency trading could disrupt economic and financial order, provide breeding grounds for illegal and criminal activities, and endanger people’s properties.
Bloomberg data analyst Jack Wang confirmed during a webinar centering on the subject that the ban would still be in effect by the launch of Hong Kong spot Bitcoin ETFs on April 30. He cited his experience to drive his claim wherein he actually tried to set up a trade for a futures-based crypto ETF listed in Hong Kong only to be instantly denied the service.
The analyst projected that the entry of spot Bitcoin ETFs in the Chinese SAR will unlikely force a change in the central government’s stance. But then again, Reuter’s report last January claimed mainland investors are finding a workaround from these restrictions through a grey area that allows them access to digital assets via crypto exchanges like Binance and OKX as well as over-the-counter mediums.
HK Spot Bitcoin ETFs Won’t Be as Big as the Powerhouses in the US
Bloomberg Senior ETF analyst Eric Balchunas has a lukewarm reception for the launch of spot Bitcoin ETFs in Hong Kong. Although he sees them as a positive development in the sector going forward, he doesn’t believe they will be as big as their US counterparts.
The analyst said the new financial instruments in HK would be lucky if they could even reach a combined $500 million inflows in their launch, and his estimate even factored in the upcoming spot Ethereum (ETH) ETFs within the jurisdiction.
Balchunas based his assessment on the smaller scope of the Hong Kong ETF market, which is roughly $50 billion. Likewise, the financial powerhouses participating in the niche are relatively smaller than the ones in the US like BlackRock, Grayscale, and Fidelity. Lastly, the demand for spot crypto ETFs is further pushed back by the inability of mainland Chinese investors to dip their hands in them.