Harvest Global Investments CEO Han Tongli may seek approval for his company to list spot Bitcoin and Ethereum exchange traded funds (ETFs) on the Stock Connect scheme suggested that. The company's listing could give mainland Chinese investors direct access to these products within about two years.
During the Bitcoin Asia Conference in Hong Kong, Han said he would “not rule out” Harvest pursuing this opportunity “if everything goes smoothly and well.”
Hong Kong’s role in bridging mainland China and cryptocurrencies
Launched in 2014, the Stock Connect program facilitates trading between the Hong Kong and Shanghai stock exchanges and expands access to ETFs through the ETF Connect scheme. Providing exposure to Bitcoin and Ethereum to mainland investors through related channels is the main key feature of Harvest's interest in including Spot Cryptocurrency ETFs in its Stock Connect scheme.
The Stock Connect scheme is currently a hot topic as it was developed amid the Chinese government's strict stance on cryptocurrencies. Most commercial cryptocurrency activity is prohibited in mainland China, although private ownership and trading are murky in legality.
Nevertheless, Harvest's potential move is to fight to foster acceptance of cryptocurrency investments within a regulated framework.
Challenges and opportunities
The introduction of Bitcoin and Ethereum spot ETFs in Hong Kong is significant in establishing a cryptocurrency hub, but the initial reception was poor as trading volumes were lower than expected.
Harvest CEO Han Tong-li said many people “remain skeptical that Hong Kong is a special country.” [administrative] ”, suggesting a more cautious approach to the market.
Han believes that Hong Kong’s potential for growth in the crypto market is due to the city being portrayed as a “more neutral” region.
The CEO also said the domestic crypto ETF could eventually be twice the size of a similar U.S.-based product, but declined to say when. In other words, the faster Hong Kong can establish its virtual ecosystem, the more ETFs will be successful.
Impact on mainland Chinese investors
If Harvest Global Investments is successful in acquiring a spot crypto ETF with Stock Connect, it will open up new investment avenues for mainland Chinese investors. With the mainland regulatory environment so uncertain, Stock Connect could even be a savior providing a regulated route to crypto investment.
However, what remains uncertain is how the Chinese government's policy towards digital assets will impact this system.
