Despite launching new Bitcoin and Ether ETFs in Hong Kong, mainland Chinese investors remain sidelined due to longstanding cryptocurrency bans in their home country.

Spot Bitcoin and Ether ETFs Launch in Hong Kong, But Remain Inaccessible to Mainland Chinese Investors

Mainland Chinese citizens could not purchase Bitcoin and Ether ETFs in Hong Kong because the mainland prohibited cryptocurrency transactions years ago.

Bloomberg data analyst Jack Wang believes that the imminent launch of spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) in Hong Kong would not open up the market to mainland Chinese investors.

Following Hong Kong's spot BTC and ETH ETFs licensing, the three Chinese asset managers, China Asset Management, Harvest Global Investments, and Bosera, established the spot crypto ETFs through Hong Kong subsidiaries on April 30, as per Cointelegraph.

Despite their close ties to mainland China, the ETF issuers cannot give Bitcoin or Ether exposure to investors in that country.

"Mainland Chinese citizens will not be able to participate in this," Wang stated on April 24 during a Bloomberg webinar about Hong Kong's licensing of spot cryptocurrency ETFs.

He highlighted a declaration the Chinese State Council released in September 2021, which stated that no financial institution can open accounts, transfer cash, or offer clearing for cryptocurrency-related activities.

"So even for the futures-based crypto ETF listed in Hong Kong — I actually tried to set a trade — the brokers will just directly reject the trade," Wang noted, adding that Chinese investors will not engage with this product in the near future.

He also expressed confidence that the launch of spot Bitcoin and Ether ETFs in Hong Kong will not benefit mainland China's regulatory environment and will not attract Chinese investors to the crypto market.

"I would say it’s 100% not going to happen," the analyst stated.

Potential Regulatory Changes Could Open Hong Kong's Crypto ETFs to Mainland Chinese Investors

According to Thomas Zhu, head of digital assets at Hong Kong-based China Asset Management (or China AMC), mainland Chinese investors' ability to purchase crypto ETFs in Hong Kong relies on the "enactment of forthcoming regulatory modifications."

“As for other products, starting from 2014, the Mainland and Hong Kong regulators made a concerted effort to establish Mainland-Hong Kong Stock Connect. With these trading links, Mainland investors can directly trade eligible Hong Kong stocks and ETFs,” Zhu told Cointelegraph.

Amid increased euphoria over the forthcoming introduction of spot crypto ETFs in Hong Kong, Bloomberg analyst James Seyffart pointed out that Bitcoin ETFs in the United States had more assets than all Hong Kong ETFs combined.

“The U.S. ETF market is almost $9 trillion in assets — that's trillion with a 'T'. The entire Hong Kong ETF market is around $50 billion. Mainland China ETFs are around $325 billion. We're talking literal orders of magnitude differences in size and impact,” Seyffart wrote in an X post on April 12.

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