Reuters - "Chinese Bitcoin ETFs as early as next week"

Bitcoin ETFs Arrive in China, Specifically in Hong Kong. Reuters reports they could be introduced as early as next week.

Bitcoin ETF Made in China

Several Chinese investment funds are in the running through their Hong Kong subsidiaries. The approval of their Bitcoin ETFs could happen much sooner than expected.

As a reminder, Bitcoin has been at a standstill for over two years in China. Owning it is not illegal, but exchanges were banned in 2021. Thus, acquiring it in a few clicks is not possible.

However, Chainalysis estimates that the equivalent of 86 billion dollars was traded between July 2022 and June 2023. It was 64 billion in Hong Kong. Bitcoin continues to circulate underground, in P2P transactions.

Bitcoin miners were also banned in 2021. They now represent only 15% of the global hashrate, down from 60% before the “ban”. Yet still, many individuals continue to mine despite prohibitive electricity costs.

As we wrote in our article Bitcoin Halving – Deathblow for Chinese Miners:

“Why mine at a loss? It’s simple: to move money out of China, or to convert yuan into dollars. They convert the Chinese yuan into ASICs and electricity, which generates BTC that can then be converted into dollars.”

Indeed, Bitcoin is an escape route from the strict capital controls of the Chinese authorities.

But as often, Hong Kong serves as a safety valve. For instance, Reuters reported in January that crypto-currency exchange shops can be easily found in its shopping streets:

“At Crypto HK, a popular store located in the Admiralty district, customers can buy bitcoin with a minimum of 500 Hong Kong dollars ($64) without having to provide their ID card.”

ETFs As Early As Next Week?

According to Reuters, the daily volumes traded in the streets of Hong Kong reach several million yuan, and sometimes tens of millions.

In short, the attraction for Bitcoin is far from fading. Hence the arrival of big Chinese investment funds now that BlackRock has taken the plunge. The first approvals “are likely to be announced next week,” reports Reuters.

At least four asset managers from mainland China and Hong Kong are in the game. China Asset Management, Harvest Fund Management, and Bosera Asset Management are among the candidates. These funds each manage assets equivalent to several hundred billion dollars.

The arrival of Chinese ETFs is a good omen when we see Bitcoin’s 60% rise since the launch of their American counterparts. It remains to be seen if the volumes will be as high as those of BlackRock and Fidelity. As we highlighted previously:

“The total Hong Kong ETFs weigh in at 450 billion dollars, versus 6.4 trillion in the United States…”

But who knows, with the Shanghai stock exchange stagnating for years, perhaps the demand will surprise us.