By
Bena Ilyas
May 24th, 2024
According to experts, there is no better time than now for China to seek alternative investment opportunities.
Richard Byworth, a Managing Partner at SyzCapital, has further renewed hopes that Hong Kong’s spot Bitcoin and Ether exchange-traded funds (ETFs) may soon find their way into mainland China. This follows after the individual, who seems to have insider knowledge on the matter, took to his X account to announce that there are ongoing discussions in that regard.
Per the announcement, Byworth claims that there is a possibility that the ETFs are integrated into the Stock Connect system. The bottom line of that claim, however, is that capital is now poised to flow from the mainland into the so-called digital asset funds.
The initiative suggests a significant step forward for the cryptocurrency industry, particularly in Asia, where regulation has often stifled widespread adoption. So, while, on one part, the integration is expected to bolster Hong Kong’s position as a global financial hub, it also potentially opens up new investment avenues for the mainland Chinese populace.
Regulatory Shifts Spark Optimism as Hong Kong Paves the Way for Bitcoin ETFs to Enter Mainland China
Buttressing Byworth’s views, Brian HoonJong Paik, co-founder & COO at SmashFi, has also shared his thoughts on the prospect of attracting mainland Chinese investors to Hong Kong’s Bitcoin ETFs. Paik noted that there is a great misconception that mainland Chinese investors are currently restricted from investing in ETFs available on the Hong Kong Stock Exchange. However, he said that is not the case.
According to him, there are several avenues that make it possible for mainland capital to flow into Hong Kong’s markets. That is, without necessarily flouting any regulatory requirements.
Paik named the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect as very good examples of how mainland investors may trade stocks across the border. He also mentioned the Qualified Domestic Institutional Investor (QDII) scheme. Paik says this scheme gives Chinese institutional investors the opportunity to participate in overseas markets, including Hong Kong’s.
Without a doubt, the previous stance of China on crypto may have been extremely cautious. That is despite the country showing interest in blockchain technology. However, the potential availability of Bitcoin ETFs through Hong Kong could provide mainland investors with indirect exposure to the cryptocurrency market.
Moreover, there is no better time than now for China to seek alternative investment opportunities. Paik noted that the majority of Chinese wealth is locked away in real estate, with nearly 100 million empty homes. So, for the country to stabilize its socio-economic landscape, “it’s just a matter of time” before it begins considering digital assets, Paik concluded.