Bitcoin and Ethereum spot exchange-traded funds (ETFs) might obtain closing approval in Hong Kong as quickly as subsequent Monday. Based on a latest Matrixport report, these funding merchandise might unlock as much as US$25 billion in demand from Chinese language buyers by way of the Southbound Inventory Join scheme.
Nonetheless, latest revelations and clarifications from a number of issuers have discovered that Matrixport’s report was false.
Why Mainland Chinese language buyers can’t purchase Hong Kong-listed ETFs
Cryptocurrency journalist Colin Wu just lately printed an article on the X platform revealing that southbound funds from mainland China are usually not allowed to put money into cryptocurrency ETFs listed in Hong Kong. This contradicts earlier experiences predicting vital capital inflows into funding automobiles from mainland Chinese language buyers.
Singaporean encryption service supplier Matrixport stated within the report:
The potential approval of a Hong Kong-listed Bitcoin spot ETF might appeal to billions of {dollars} in funding as mainland buyers make the most of the Southbound Join scheme, which boosts as much as 500 billion yuan (HK$540 billion and US$70 billion) yearly transaction.
Usually, Southbound Join permits certified mainland Chinese language buyers to buy eligible Hong Kong-listed shares. Nonetheless, this doesn’t embody cryptocurrency funding merchandise reminiscent of spot BTC and ETH exchange-traded funds.
A number of Bitcoin ETF issuers in Hong Kong informed WuBlockchain that southbound funds from mainland China will certainly not be capable to buy cryptocurrency ETFs, and Matrixport’s report is fake. An earlier report from Matrixport urged {that a} Hong Kong-listed Bitcoin spot ETF…
— Wu Blockchain (@WuBlockchain) April 13, 2024
This restriction is because of mainland China’s strict measures and rules concerning using cryptocurrencies and funding in crypto merchandise. Regardless of mainland China’s conservative stance on digital property, Hong Kong continues to place itself as a key hub for Asia’s cryptocurrency market.
Impression on the launch of ETF buying and selling
Based on Bitcoinist, the Hong Kong Securities and Futures Fee (SFC) is at the moment within the closing levels of approving Bitcoin and Ethereum ETFs for buying and selling within the Particular Administrative Area. The launch of those merchandise is anticipated to draw vital new capital not solely from Hong Kong but additionally from mainland China.
In early January, the US launched an analogous Bitcoin ETF, portray a optimistic image of large capital inflows into the digital asset discipline. The truth is, the success of those funding automobiles is tied to the present bullishness of Bitcoin, the most important cryptocurrency by market capitalization to this point this 12 months.
Nonetheless, the most recent clarification from the ETF issuer has triggered the necessity to reassess market expectations for the launch of those cryptocurrency funding merchandise in Hong Kong. Traders anticipating vital market participation could need to reassess their positions, particularly as regulatory restrictions pose obstacles to capital inflows from mainland China.
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