Mainland Chinese Residents Can Only Access Hong Kong Crypto ETFs Through Loophole
Hong Kong regulators have clarified that Mainland Chinese residents will not have access to Hong Kong Bitcoin and Ethereum ETFs.
Branches of China Asset Management, Harvest Fund Management, and Bosera Asset Management will launch their highly anticipated crypto ETFs by 30 April.
“No matter the virtual asset futures ETFs currently on the Hong Kong market, or the virtual asset spot ETFs that will be issued in the future, they cannot be sold to retail investors in mainland China and other places where the sale of virtual asset-related products is prohibited,” the city’s Securities & Futures Commission said in a statement.
China’s anti-money laundering laws and Bitcoin ban restrict its citizens from accessing ETF products in Hong Kong.
However, the ban excludes Mainland Chinese residents who have temporary or permanent residence permits in Hong Kong. The ETFs, which are tradable in the Chinese Yuan, are all issued by Chinese off-shore managers.
The ETFs would have two main initial benefits: increased distribution in Hong Kong and increased credibility of crypto as an asset class in its own right. It could also potentially bring more liquidity to the Bitcoin market, facilitate more efficient price discovery, attract a broader investor base, and possibly reduce price volatility through increased institutional participation.
The Hong Kong Securities & Futures Professionals Association (HKSFPA) is also considering a self-regulatory committee to oversee compliance in its crypto industry.
HKSFPA highlighted how there is no organization dedicated to the development of Hong Kong’s financial market industry and that current regulatory practices focus on supervision rather than coordination.
The officials proposed that the Securities & Futures Commission (SFC) could oversee market conduct but could also entrust industry players with its licensing authority.
Hong Kong is also tightening up its local crypto scene to provide a safer environment for traders. Hong Kong police arrested 72 people in connection with the JPEX scandal, which marked the city's biggest case of financial fraud. Three people were also arrested for their involvement in a HK$1.8 billion money-laundering scheme.