Bitcoin and Ether exchange-traded funds (ETFs) listed on the spot market in Hong Kong are anticipated to secure final approvals as soon as the following week. As suggested by a Matrixport analysis, there is potential for these financial instruments to tap into approximately $25 billion of investment interest from Chinese traders through the Southbound Stock Connect scheme.
Instead of “However, the latest revelations and clarifications from several issuers have found this Matrixport report to be false,” you could say “New information from multiple sources has proven the Matrixport report inaccurate.”
Why Mainland China Investors Can’t Buy Hong Kong-Listed ETFs
Recently, crypto reporter Colin Wu shared on the X platform that Chinese funds based in the mainland are prohibited from investing in cryptocurrency ETFs traded in Hong Kong. Contrary to earlier predictions, this means fewer resources will flow from Chinese investors into these financial instruments.
Singapore-based crypto services provider Matrixport said in a report:
It’s plausible that the approval of Bitcoin Spot ETFs on the Hong Kong stock exchange could draw in numerous billions of dollars from Chinese investors through the Southbound Connect program. This program allows for approximately 500 billion RMB (equivalent to HK$540 billion and $70 billion) in transactions each year.
Generally speaking, the Southbound Stock Connect permits qualified Chinese investors to purchase shares listed in Hong Kong. Nevertheless, it does not extend to cryptocurrency investment vehicles like Bitcoin and Ethereum exchange-traded funds.
A few Bitcoin ETF providers based in Hong Kong have informed WuBlockchain that investors from mainland China cannot directly purchase cryptocurrency ETFs there, contradicting a previous Matrixport report suggesting otherwise.
— Wu Blockchain (@WuBlockchain) April 13, 2024
Due to China’s tight control over the usage of cryptocurrencies and investment in crypto-related products, this restriction exists. Although China remains cautious towards digital currencies, Hong Kong has emerged as a significant player in the Asian cryptocurrency scene.
Impact On The Debut Of ETF Trading
According to Bitcoinist’s news, Hong Kong’s Securities and Futures Commission (SFC) is nearing the final approval process for allowing the trading of Bitcoin and Ether Exchange-Traded Funds (ETFs) in Hong Kong. This development is projected to attract substantial new investments not just from Hong Kong residents but also from people in mainland China.
The introduction of Bitcoin ETFs resembling each other in the US during early January has created an optimistic outlook regarding substantial investments in the digital currency market. Consequently, these ETFs’ success is linked to the current Bitcoin price surge, being the largest cryptocurrency by market value, for the year so far.
The recent clarification from ETF issuers has led some investors to reconsider their expectations for crypto investment products in Hong Kong. Those hoping for substantial market engagement may need to rethink their strategies, considering regulatory hurdles that could limit investment from China.
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2024-04-15 04:13