Bitcoin ETFs are arriving in China, Hong Kong more precisely. Reuters suggests that they could be introduced as early as next week.
Bitcoin ETF Made in China
Several Chinese investment funds are in the running via their Hong Kong subsidiaries. Approval of their Bitcoin ETFs could come much sooner than expected.
As a reminder, bitcoin has been at a standstill for more than two years in China. Possessing them is not illegal, but exchanges have been banned in 2021. It is therefore impossible to obtain them in a few clicks.
That said, Chainalysis estimates that the equivalent of 86 billion dollars were exchanged between July 2022 and June 2023. It was 64 billion in Hong Kong. Bitcoin continues to circulate underground, in P2P.
Bitcoin miners were also banned in 2021. They now represent only 15% of the global hashrate, compared to 60% before the ban. But here again, many individuals continue to mine despite the prohibitive price of electricity.
As we wrote in our article Bitcoin Halving – Coup de grace for Chinese miners :
“Why mine at a loss? It's simple: to get money out of China, or to convert the yuan into dollars. They convert Chinese yuan into ASICS and electricity, which helps generate BTC which can then be converted into dollars. »
Bitcoin is in effect an escape from the strict capital controls of the Chinese authorities.
But as is often the case, Hong Kong acts as a decompression valve. Reuters reported for example in January that cryptocurrency exchange shops are easily found in the 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 starting next week?
According to Reuters, daily volumes traded on the streets of Hong Kong reach several million yuan, or even tens of millions.
In short, the attraction of bitcoin is far from fading. Hence the arrival of large 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 mix. China Asset Management, Harvest Fund Management and Bosera Asset Management are among the candidates. These funds each manage the equivalent of several hundred billion dollars.
The arrival of Chinese ETFs bodes well when we see the 60% increase in bitcoin since the launch of their American counterparts. It remains to be seen whether volumes will be as high as those of BlackRock and Fidelity. As we pointed out previously:
“All Hong Kong ETFs are worth $450 billion, compared to $6.4 trillion in the United States…”
But who knows, with the Shanghai Stock Exchange holding up for years, maybe demand will surprise.
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