According to Decrypt, the seasoned analyst from 10x Research revealed that Hong Kong's spot Bitcoin and Ethereum exchange-traded funds (ETFs) may commence trading by the end of this month.
Anticipated Commencement of Trading Following Hong Kong's ETF Approval
"Markus Thielen, founder of 10x Research, mentioned that while no official trading date has been announced, there are expectations for trading to commence around April 30," Thielen, who also produces research reports for Singapore-based trading platform Matrixport and previously served as its Head of Research and Strategy, shared this insight.
His remarks followed Hong Kong's recent conditional approval of several spot Bitcoin and Ethereum ETF applications managed by China Asset Management, Harvest Global, Bosera, and HashKey. Thielen emphasized that the success of Hong Kong's ETFs will greatly hinge on whether Chinese mainland investors can access them, especially considering the significant demand for crypto asset exposure following the U.S. approval of spot Bitcoin ETFs in January, which contributed to the recent bullish trend in the market.
Southbound Stock Connect Program: Utilization and Potential Expansion
The southbound stock connect program on the Shanghai Stock Exchange enables qualified mainland Chinese investors to access eligible Hong Kong financial assets. With a daily quota of ¥42 billion, trades exceeding this limit are rejected.
However, in recent years, this quota has not been fully utilized. Markus Thielen explained, "This program allows mainland investors to purchase up to ¥500 billion ($69 billion USD) of Hong Kong-listed stocks annually, or the equivalent of HK$540 billion annually."
He further noted, "During the last three years, the spare annual quota ranged from HK$100 billion to HK$200 billion ($15 billion to $25 billion)." Thielen emphasized that while this upper limit exists, it is unlikely that the ETFs will be integrated into the southbound program for at least six months.
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Market Perspectives on Chinese Investors and Crypto Regulation
Markus Thielen explained, "Most market participants anticipate that Chinese mainland investors won't have access to these products and won't be included in the southbound connect program."
He added, "Currently, Hong Kong ETFs must be listed for six months, but regulations could change." Thielen suggested that due to "China's property concerns" and a prolonged stock market downturn, the country might turn to Bitcoin for asset diversification.
"While some Bitcoin activities are restricted in China, the ban may be driven by concerns about social unrest related to scams and illegal fundraising," he noted.
"Regulated products like Bitcoin and Ether ETFs are more favourable." Despite China's 2021 ban on crypto trading and mining, the country has remained engaged in crypto discussions.
In 2023, Binance processed $90 billion in Chinese transactions in a single month, representing 20% of its global volume at the time. With Hong Kong emerging as a crypto hub by opening trading to retail investors and approving crypto spot ETFs, experts believe it could serve as a "testing ground" for China.
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