Harvest Global Investments, a Chinese fund house and one of the issuers of the first Bitcoin and Ethereum spot trading funds (ETFs) in Hong Kong, Certain It plans to open these funds to mainland Chinese investors through Hong Kong Stock Connect. This development could significantly expand the investor base and significantly impact the cryptocurrency market in Asia.
Harvest CEO Eyes Mainland Access for HK Bitcoin ETF
Currently, Harvest Global offers Bitcoin and Ether ETFs in Hong Kong, as these products allow direct investment in the respective cryptocurrencies. The possibility of these ETFs being included in the ETF Connect scheme, part of the broader Stock Connect initiative launched in 2014 to connect Hong Kong to mainland Chinese exchanges, was discussed by Harvest CEO Han Tongli at the Bitcoin Asia conference.
“We do not rule out applying to include our ETFs in the Connect Program, as long as everything goes smoothly and well in the next two years,” Hahn said.
The move to integrate cryptocurrency investments into Stock Connect could be an important step, given previous restrictions on access to these products for mainland investors. Hong Kong's approach to regulating cryptocurrencies has been more open compared to mainland China, where most commercial cryptocurrency activities are banned, but trading and ownership by individuals remains a legal gray area.
Despite the innovative nature of these spot cryptocurrency ETFs and their ability to offer direct exposure to cryptocurrencies rather than derivatives or shares of crypto-related companies, initial trading volumes were disappointing compared to the US market. According to Han, this is partly due to the market's cautious view of Hong Kong's virtual asset policies and their implications for the future of these ETFs.
Han noted during a panel discussion at the Bitcoin Asia Conference that the local market could double the size of US products, stressing the strategic importance of Hong Kong as a more neutral territory with broader appeal in Asia. He attributed the slow start to various factors, including market skepticism about Hong Kong's commitment to becoming a cryptocurrency hub, saying: “People are still skeptical about Hong Kong's status as a special (administrative) region. It's in China, and a lot of people don't want to… Seeing Hong Kong become more successful for whatever reason.
In his discussion, Han also highlighted the competitive advantages of cryptocurrency products in Hong Kong, such as the possibility of in-kind subscriptions – purchasing ETFs directly with Bitcoin and Ether – and the temporary waiving of management fees to attract investors. These features, along with potential inclusion in Stock Connect, are crucial to attracting interest and establishing Hong Kong as a major player in the global cryptocurrency market.
At press time, Bitcoin was trading at $62,754.
Featured image created with DALL·E, chart from TradingView.com
