Are Bitcoin ETFs Poised To Reshape China’s No-Crypto Stance?

• Bitcoin ETFs have recently launched in Hong Kong.
• Emerging reports have suggested that the launch may catalyze the embrace of crypto in mainland China.
• Bitcoin ETFs have not been launched in China.

China , the powerhouse of the Asia-Pacific (APAC) region, has maintained a consistently negative stance against the crypto industry over the past years. Despite contenders like Hong Kong and Japan vying for dominance as the leading Asian digital hub, mainland China remains firm in its anti-crypto stance.

However, the recent launch of Bitcoin ETFs in Hong Kong hints at a potential shift for China.

Bitcoin ETFs in China?

Central to the speculation is a local media Caixin report on May 16, 2024, which stated that most Hong Kong Bitcoin ETF issuers’ headquarters are under Beijing’s regulatory authorities, which suggests their alignment with China’s regulatory requirements.

While the ETFs offered by three Chinese asset managers, Harvest Global Investments, Bosera Asset Management, and China Asset Management, are currently inaccessible to Chinese investors, they are expected to serve as a conduit for a more accessible and regulated crypto ecosystem.

“What I’m optimistic about is, with these rules and these regulations now in place, Hong Kong actually may find a way to be this bridge for China to Bitcoin and the greater crypto ecosystem in a way that’s safer, more controlled or regulated,” stated a Bitfarms executive to the South China Morning Post at the Bitcoin Asia conference in Hong Kong.

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Reports that the ETFs may be heading to the Chinese stock exchange Stock Connect, as suggested by X user Richard Byworth in a May 1 tweet, further fuel the chances.

Byworth emphasized ongoing talks within the Hong Kong market, hinting at the possibility of providing access to the asset class and the ability to purchase investments with mainland China currency, the Yuan.

Another point of contention is Harvest Global Investments CEO’s reported emphasis on ongoing efforts to extend ETF offerings to mainland China investors over the next few years. However, despite the positive sentiment, China’s unwelcoming stance towards crypto charts a muffled outlook.

China’s Crypto Antagonism

While there is no outright ban on crypto in China, the Chinese government has continuously reiterated its disinterest in the industry.

Authorities imposed a comprehensive ban on everything from trading to mining in 2017, effectively curtailing all crypto-linked operations among crypto exchanges and investors.

Fraudulent schemes in the industry have further tightened the government’s no-crypto campaign. In February 2024, the Dalian Supervision Bureau of China Securities Regulatory Commission reminded the public to beware of illegal fundraising scams in the name of “virtual currency” opportunities. The commission asserted that such opportunities lure investors, discouraging them within its jurisdiction.

Nevertheless, the Chinese underground crypto space is thriving despite the ban, recording a $86.4 billion crypto transaction volume in January 2024.

On the Flipside

• Despite the strict stance in the country, reports surfaced in January 2024, revealing that Chinese officials covertly use cold wallets for bribery.
• Hong Kong’s Bitcoin ETFs, launched on April 30, had a lukewarm debut .
• In December 2023, the Chinese Ministry of Industry and Information Technology expressed interest in Web 3 initiatives to advance the local digital landscape.

Why This Matters

Accepting Bitcoin ETFs in China would signify a significant shift in the region’s crypto landscape, indicating a potential easing of the government’s strict stance. Additionally, it could open up an additional pathway to the asset class, further fueling its growing adoption.

Read more about evolving Chinese regulations to prevent digital crimes:
China Overhauls Crypto AML Laws in Response to Rising Crimes

HTX risks complete exit from Hong Kong as it withdraws license application; read more:
HTX’s Hong Kong Arm Pulls License Application For A 2nd Time