Hong Kong crypto ETF approval could draw pent-up Chinese investment

"Hong Kong's approval of a crypto spot ETF is another channel to unlock pent-up investment demand," said Jamie Coutts, crypto market analyst at Bloomberg Intelligence. "Hong Kong's crypto spot ETFs account for 0.18% of total crypto assets under management. Stocks and real estate are the worst performers among Chinese investments. The reason why Chinese hashrate is rising despite the mining ban is because they are circumventing capital controls, and mining is the perfect way to convert surplus energy into BTC and take it out of the country."

On the other hand, Bloomberg ETF expert Eric Balchunas was critical of the Hong Kong crypto spot ETF. "Even if Hong Kong's Bitcoin and Ethereum spot ETFs become fully listed, the level of inflows into these products will be limited to $500 million at most," Balchunas said. "It's not possible for Chinese to buy ETFs in Hong Kong, the companies involved in the market are not big names, and the investment fees are expensive," he added.

Previously, the Hong Kong Securities and Futures Commission (SFC) approved a BTC-ETH spot ETF on May 15, with applications from China Asset Management, Bosera Asset Management, Hashiki Capital, and Harvest Global Investments.