Key facts:
- Hong Kong is a special administrative region of China with its own regulations.
- Many describe the Hong Kong market as a “test laboratory” for the Chinese government.
Hong Kong, the fifth largest financial market in the world, would be ready to approve spot ETFs for bitcoin (BTC) and ether (ETH), a cryptocurrency on the Ethereum network. That approval could come as soon as Monday of next week.
The information was published by Bloomberg, a newspaper specialized in economics and finance, based on sources who asked not to be revealed (because no official announcement has yet been made).
Despite the lack of official information, the rumors only increase expectations. CriptoNoticias has reported that there are at least 10 companies interested in launching these financial products in Hong Kong.
According to Adrian Wang, CEO of Metalpha, an investment manager based in Hong Kong, the importance of ETFs in that administrative region of China “is far-reaching, as they could generate new global investments, as well as drive adoption.” of cryptocurrencies to a new level.
Something that makes the Hong Kong financial market especially interesting is its link with China. Since 1997, the Hong Kong peninsula and archipelago has been a special administrative region. This means that, although legally it belongs to China, it retains some autonomy in terms of legislation and regulations.
The differences are notable when it comes to bitcoin and cryptocurrencies. While China has on numerous occasions banned trading and payments with digital assets, in Hong Kong there is favorable regulation for these financial instruments. Many believe that if bitcoin ETFs are successful in Hong Kong, they could cause the Chinese government to relax its stance, if only to avoid being left out of business.
China could also be expected to enable investors to trade bitcoin ETFs launched in Hong Kong. Bloomberg Intelligence senior analyst Eric Balchunas has shown that Chinese investors are amassing gold ETFs en masse. In words of this investment fund specialist, the Chinese “are very desperate to buy things that are not linked to their own economy or stock market, which has been in the gutter.”
Balchunas adds:
“For those wondering, buying bitcoin ETFs is not allowed there [in China]. If they were, I suppose they would go crazy for them given the amount of FOMO they have been showing for gold and US stocks (and bitcoin easily outperformed both).”Eric Balchunas, Bloomberg Intelligence analyst.
Faced with so much optimism, there are also those who have decided to have a more conservative attitude. Yesterday Market Times reported the words of Vetle Lunde, senior analyst at K33 Research. He points out that Hong Kong is a large financial market, but much smaller than the US market. Therefore, he says that “the ETF market in Hong Kong should see less exuberant flows than those seen in the United States.”
