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Harvest Eyes Mainland Investor Access for Hong Kong Crypto ETFs

Harvest Global Investments, a leading issuer of Hong Kong’s first spot crypto ETFs, is considering future inclusion in the ETF Connect scheme. This program allows mainland Chinese investors to access Hong Kong-listed ETFs. Harvest CEO Han Tongli expressed interest in applying, depending on market developments over the next two years.

ETF Connect, launched in 2022, facilitates mainland investor participation in select Hong Kong ETFs. Its inclusion could significantly boost the crypto market’s confidence and provide a new investor base for these nascent products. However, some question its feasibility given China’s strict stance on cryptocurrencies.

While Hong Kong’s bitcoin and ether futures ETFs (launched in 2022) are not part of Stock Connect, the city’s recently debuted spot crypto ETFs were hailed as a significant step towards becoming a crypto hub. Industry experts highlighted advantages like in-kind subscriptions (buying ETFs directly with crypto) and introductory fee waivers.

However, initial trading volumes fell short of expectations compared to US bitcoin ETFs. This, according to Han, reflects a wait-and-see approach due to concerns about Hong Kong’s commitment to the virtual asset sector. Despite this slow start, Han believes Hong Kong’s “neutral” position offers long-term potential, with the local crypto ETF market potentially exceeding US counterparts in size.

Harvest aims to establish its spot crypto ETFs as Hong Kong’s volume leader by year-end, paving the way for collateralised financial products based on them. The launch of these ETFs dominated discussions at the recent Bitcoin Asia conference, signifying a crucial milestone for Hong Kong’s ETF market.

The anticipation surrounding the potential inclusion mirrors sentiments expressed by Richard Byworth, a managing partner at SyzCapital and a prominent Bitcoin investor. Byworth hinted at the possibility of integrating the spot Bitcoin ETF within the Stock Connect framework, which facilitates cross-border trading between linked markets. Such a move could significantly alter the dynamics for mainland investors looking to diversify into Hong Kong’s burgeoning crypto market.

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