Skip to content

Hong Kong Spot Bitcoin and Ethereum ETFs: Is The Door Opening to Mainland China?

The debut receieved a cool reception from traders, with a trading volume of just 12 million USD. However, there is rumblings about a future where the funds could open up to residents of mainland China.

Photo by Ryan Mac / Unsplash

Today, a group of exchange-traded funds (ETFs) directly investing in cryptocurrencies made a cooler-than-anticipated debut in Hong Kong. This moment was set to mark a big shift in the global cryptocurrency market, as the city becomes the first market in Asia to offer the ability to trade cryptocurrencies at spot prices.

The ETFs were issued by China Asset Management (CAM), Harvest Global Investments, and a partnership between HashKey Capital and Bosera Asset Management. The success of the funds is important for Hong Kong as it hopes to strengthen its reputation as a modern financial center.

However, one of the key questions remains: Can residents from mainland China get on board? 

Crypto trading is banned in mainland China, and although there is a program that gives some Chinese investors access to some Hong Kong ETFs, these new funds fall outside that scope. But for how long?

In an interview with Bloomberg, CAM’s Chief Executive Officer Yimei Li reiterated that “mainland China investors could not directly invest in Hong Kong,” but crucially, she hoped there could be a “new opportunity” for mainland Chinese investors in the future to “participate in this process.” 

As the ETFs go live in Hong Kong, the country is also hosting the Bitcoin Asia Conference, which starts next week, and adverts for both the conference and the ETFs are being marketed to residents in the country.

The U.S. market has already seen the historic rollout of spot Bitcoin ETFs, amassing a staggering $52 billion in assets since January. However, the trend has shifted in the last few weeks, with spot Bitcoin ETFs seeing more than $51.5 million in net outflows yesterday alone.

Already, we've seen signs of a lukewarm reception to the first day of trading, with Bitcoin and Ether both down after weak demand. The six ETFs registered a first-day trading volume of just $12 million USD.

Crypto ETFs allow investors to gain exposure to the price movement of the underlying assets without having to own the asset directly.

Still, the market for regulated crypto trading is heating up. Market observers had anticipated robust demand for the newly launched spot-crypto ETFs in Hong Kong, with first-day inflows estimated to reach approximately $300 million. Some projections estimate Hong Kong's Bitcoin and Ether funds may amass $1 billion over the next two years.

Harvest Global's CEO, Tongli Han, thinks those projections are too low. In a bullish interview, he argues Hong Kong's unique position as a financial hub catering to both Western and Eastern investors could send funds much higher.

We will continue to observe.