Learn why mainland Chinese investors may not be able to participate in Hong Kong's upcoming spot Bitcoin and Ethereum exchange-traded funds (ETFs) despite their approval. Explore insights from analysts regarding regulatory restrictions and the broader impact on the crypto market.
Despite the recent approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in Hong Kong, mainland Chinese investors may find themselves excluded from participating in these offerings due to regulatory restrictions, according to analysts.
Bloomberg data analyst Jack Wang highlighted that mainland Chinese citizens will likely not have access to the newly approved ETFs, citing China's ban on crypto transactions issued by the State Council in September 2021. This ban prohibits financial institutions from facilitating crypto-related activities, including account creation, fund transfers, and clearing services.
Wang emphasized that even with the close ties between the ETF issuers and mainland China, Chinese investors will not be able to engage with these products in the short term, as brokers are expected to reject trades related to crypto ETFs.
Thomas Zhu, head of digital assets at China Asset Management, acknowledged the potential for mainland Chinese investors to acquire crypto ETFs in Hong Kong but noted that it depends on forthcoming regulatory changes.
While there is optimism surrounding the launch of spot crypto ETFs in Hong Kong, analysts like James Seyffart caution against overstating its impact compared to the U.S. ETF market. Seyffart highlighted the significant disparity in assets between the U.S. and Hong Kong ETF markets, emphasizing the vast difference in size and influence.
Overall, the approval of spot crypto ETFs in Hong Kong may not immediately translate into increased access for mainland Chinese investors, underscoring the ongoing regulatory challenges and limitations within the broader crypto landscape.
(HELEN PARTZ, COINTELEGRAPH, 2024)