The Bitcoin and Ethereum ETFs from Hong Kong Could Bring in $25 billion

Hong Kong’s Bitcoin and Ethereum ETFs are set to be traded, but their success will depend on Chinese investors’ access. Markus Thielen, founder of 10x Research, believes these products could attract up to $25 billion.

Hong Kong’s crypto ETFs, a $25 billion bonanza if China plays along

As Hong Kong’s Bitcoin and Ethereum ETFs are poised for launch, experts anticipate a significant impact on the market. In an interview with colleagues at Decrypt, Markus Thielen, founder of 10x Research, said that these ETFs could begin trading as soon as April 30th.

This announcement follows the conditional approval granted by the Hong Kong Securities and Futures Commission (SFC) to several ETF applications managed by major players such as China Asset Management and Harvest Global.

Despite the success of the spot Bitcoin ETFs in the United States in January, Markus Thielen emphasizes that the real challenge for Hong Kong’s ETFs is Chinese investors’ access to these products.

Indeed, the Shanghai Stock Exchange’s Southbound Stock Connect program theoretically allows investors from the country to access Hong Kong’s financial assets, but regulatory hurdles could delay this opportunity.

The prospects and obstacles to overcome

Markus Thielen believes that if Chinese investors had access to Bitcoin and Ethereum ETFs, they could allocate up to $25 billion annually, thus offering lucrative potential for these financial products.

However, he predicts that it could take at least six months before these ETFs become available to Chinese investors, due to constantly evolving regulation.

Although China has recently toughened its stance toward cryptocurrencies, Hong Kong’s openness to crypto spot ETFs could suggest a strategic change in direction. 

According to Thielen, “Nothing happens in Hong Kong without China’s blessing, not even a drop of rain. Thus, the approval of Bitcoin and Ethereum ETFs by Hong Kong’s financial authorities (HKMA and SFC) suggests a thoughtful decision and a calculation of the potential impact of these products.”

Some analysts speculate that China is using Hong Kong as a “testing ground” to assess the impact and acceptance of Bitcoin and Ethereum ETFs before possibly allowing them on the mainland.