Mainland China investors won’t be able to buy Hong Kong Bitcoin ETFs

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The upcoming launch of spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETF) in Hong Kong will not open up the market for investors in mainland China, according to Bloomberg data analyst Jack Wang.

Following Hong Kong’s approval of spot BTC and ETH ETFs, the three Chinese asset managers including China Asset Management, Harvest Global Investments and Bosera set the spot crypto ETFs through their Hong Kong subsidiaries on April 30.

Though the ETF issuers have close ties with mainland China, they will not be able to provide Bitcoin or Ether exposure to investors in that jurisdiction.

“Mainland Chinese citizens will not be able to participate in this,” Wang said on April 24 during a Bloomberg webinar devoted to Hong Kong’s approval of spot crypto ETFs.

He cited a statement from the Chinese State Council issued in September 2021, which indicated that any financial institution is not allowed to create accounts, transfer funds or provide clearing for any crypto-related transactions.

Source: Bloomberg

“So even for the futures-based crypto ETF listed in Hong Kong — I actually tried to set a trade — the brokers will just directly reject the trade,” Wang stated, adding that Chinese investors are not going to get in touch with this product at all in the short term.

He also expressed confidence that the launch of spot Bitcoin and Ether ETFs in Hong Kong will have no positive impact on the regulatory environment in mainland China and will not open the crypto market to Chinese investors.

“I would say it’s 100% not going to happen at least,” the analyst said.

According to Thomas Zhu, head of digital assets at Hong Kong-based China Asset Management — or China AMC — the legibility of mainland Chinese investors to acquire crypto ETFs in Hong Kong is dependent on the “enactment of forthcoming regulatory modifications.”

Related: Chinese ‘Crypto Dad’ faces government investigation

“As for other products, starting from 2014, the Mainland and Hong Kong regulators made a concerted effort to establish Mainland-Hong Kong Stock Connect. With these trading links, Mainland investors can directly trade eligible Hong Kong stocks and ETFs,” Zhu told Cointelegraph.

Amid growing optimism about the upcoming launch of spot crypto ETFs in Hong Kong, Bloomberg analyst James Seyffart pointed out that Bitcoin ETFs in the United States have more assets than all ETFs in Hong Kong.

“The U.S. ETF market is almost $9 trillion in assets — that’s trillion with a ‘T’. The entire Hong Kong ETF market is around $50 billion. Mainland China ETFs are around $325 billion. We’re talking literal orders of magnitude differences in size and impact,” Seyffart wrote in an X post on April 12.

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