Hong Kong, known as one of the leading financial centers of the world and China’s gateway for international investments, has entered the process of approving a spot Bitcoin exchange-traded fund (ETF) tied to Bitcoin (BTC). According to data from Singapore-based crypto services provider Matrixport, this investment vehicle could gather up to 25 billion dollars in demand from Chinese investors through the Southbound Stock Connect program. The Southbound Stock Connect program allows qualified mainland Chinese investors to access eligible shares listed in Hong Kong.
Hong Kong Bitcoin Spot ETFs Could Attract Billions
According to a report published today by Matrixport, the potential approval of listed spot Bitcoin ETFs in Hong Kong could attract several billion dollars in capital, facilitated by the Southbound Connect program which provides mainland investors with about 70 billion dollars in transaction ease per year.
Matrixport indicates that based on the potential existing capacity, this figure could result in 25 billion dollars. The Stock Connect program allows mainland Chinese investors to purchase up to 70 billion dollars worth of Chinese stocks annually.
Currently, it is not certain whether the spot Bitcoin ETFs under consideration for approval will be available to investors in mainland China. However, mainland China seems to be showing an inclination towards alternative assets, as recently seen in the gold prices in Shanghai.
Chinese Yuan Suffers Loss Against the Dollar
The tightly controlled Chinese Yuan has lost about 2% in value against the dollar, extending a two-year losing streak due to economic slowdown and a shrinking trade surplus. According to Matrixport, the Chinese Yuan is at its lowest level against the dollar in the last 17 years. This situation indicates a need for diversification among investors. It is also emphasized that the People’s Bank of China continues to purchase gold.
Nick Ruck, COO of ContentFi Labs, revealed that mainland funds are interested in issuing ETFs in Hong Kong, making the following point:
“Mainland-based funds are applying through their Hong Kong subsidiaries to launch spot Bitcoin ETFs. If approved, this could allow qualified mainland investors greater access to Bitcoin.”
According to Nikkei Asia, senior Chinese fund manager Bosera Asset Management’s Hong Kong subsidiary Harvest Global Investments and Value Partners, owned by Chinese brokerage GF Holdings, have applied for ETFs in Hong Kong.
