The CEO of Harvest, a Hong Kong-based company that issues a Bitcoin exchange-traded fund (ETF), is exploring ways to make the ETF accessible to investors in mainland China. Han Tongli is considering offering Harvest’s Bitcoin (BTC) and Ether (ETH) ETFs through Hong Kong’s ETF Connect framework, according to a report from the South China Morning Post on May 9.
ETF Connect, which was launched in 2022 and approved by the China Securities Regulatory Commission and the Securities and Futures Commission, aims to promote interaction and integration between Hong Kong and mainland China. It provides diverse asset allocation options and promotes liquidity.
Han stated that if everything goes smoothly in the next two years, Harvest would not rule out applying for its ETFs to be included in ETF Connect.
The inclusion of Bitcoin and Ether ETFs in ETF Connect could have a significant positive impact on cryptocurrency markets, as China has a large pool of investors. However, it remains to be seen whether the Chinese government will embrace this opportunity, as local authorities have been highly restrictive towards cryptocurrencies like Bitcoin for many years.
According to the South China Morning Post, Hong Kong’s Bitcoin and Ether futures-based ETFs, which were launched in 2022, have not been included in the Stock Connect program.
The ability of Hong Kong to offer a Bitcoin ETF to mainland Chinese investors has been a topic of interest even before the launch of the Bitcoin and Ether ETFs in Hong Kong on April 30. Many industry analysts did not anticipate significant market activity following the launch due to the relatively smaller size of the Hong Kong ETF market compared to the United States and mainland China.
Bloomberg data suggests that Hong Kong-based subsidiaries of mainland Chinese companies have 1,400% more assets in the mainland Chinese market than in the local market. Additionally, Hong Kong ETFs are estimated to account for only 0.6% of the U.S. ETF market.
In related news, Binance has responded to the Wall Street Journal’s claims that Hong Kong’s crypto ETFs have taken a market share equivalent to $50 billion. The company, known as Asia Express, has refuted these claims made by the Wall Street Journal.