Speculation Rises Over Mainland China Access to Hong Kong Bitcoin ETFs
Summary:
The recent launch of Bitcoin (BTC) and Ether (ETH) exchange-traded funds in Hong Kong has sparked speculation over potential access for mainland China investors. The debate, fueled by comments by SyzCapital's Managing Partner, Richard Byworth, centers on the possibility of these spot ETFs being included in the Stock Connect program. Despite China's anti-crypto stance, trade arrangements such as the QDII scheme and the MRF could provide a pathway for Chinese institutional investors to engage in overseas markets, including Hong Kong.
With the recent initiation of Bitcoin (BTC) and Ether (ETH) exchange-traded funds in Hong Kong, trading possibilities for Asian investors have evolved significantly. Although the initial week of trading witnessed a tepid response in comparison to the US equivalent, the geographical closeness of Hong Kong and China has positioned it at the forefront of debate on the likelihood of mainland China investors gaining access to these spot ETFs.
Richard Byworth, a managing partner at SyzCapital and an investor in BTC, sparked speculation with his statement that the Bitcoin ETFs listed in Hong Kong might soon be available to mainland China investors. Byworth indicated that the spot BTC ETF may be included in the Stock Connect program, which permits certified investors from one market to acquire eligible shares from another market within a predetermined quota.
The Shenzhen-Hong Kong Stock Connect, a bilateral investment scheme linking the Shenzhen and Hong Kong Stock Exchanges, permits investors from either market to employ their local brokers and clearing houses to engage in trading with the other market. The program spans a vast array of stocks and functions within a daily quota.
Despite Byworth’s speculation being looked at as mere hearsay, China's anti-cryptocurrency stance has stimulated considerable social media conversation. Another central figure venturing opinions on this matter is Brian HoonJong Paik, cofounder and COO at SmashFi. He pointed out that with 70% of Chinese wealth in real estate and with 100 million vacant homes, the CCP is seeking an alternative asset to counter social upheaval.
Discussing trade arrangements permitting Chinese investors to invest in spot BTC ETFs in Hong Kong, Paik alluded to besides the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the QDII scheme, allowing qualified Chinese institutional investors such as banks, insurers and funds, to make investments in overseas markets, including Hong Kong. There is also a trade agreement, the MRF, between Hong Kong and mainland China that allows eligible funds from the mainland and Hong Kong to be circulated within each other's markets.
China prohibited Bitcoin mining and foreign cryptocurrency exchanges from catering to mainland customers in 2021. Nevertheless, in spite of a comprehensive ban on cryptocurrency-related business and services, several Chinese courts have officially recognised BTC as legal property.
Published At
5/6/2024 1:13:55 PM
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