Harvest Global Investments has ambitious plans to expand its cryptocurrency ETFs into mainland China, marking a new era of investment opportunities between Hong Kong and the Chinese mainland.
Harvest Global Investments, not content with being one of the three issuers of Hong Kong’s first spot cryptocurrency ETFs, is envisioning a future where mainland investors can directly access their Bitcoin and Ether products. This vision includes their potential inclusion in the ETF Connect scheme.
Launched in May 2022, the ETF Connect scheme allows mainland investors to engage with selected ETFs listed in Hong Kong. It is part of the broader Stock Connect program, which initially linked the Hong Kong and Shanghai stock exchanges in 2014.
Han Tongli, the CEO and chief investment officer of Harvest Global, expressed the company’s openness to applying for their ETFs, which invest directly in crypto tokens, to be part of the ETF Connect program. However, the integration of their crypto ETFs into the scheme will depend on the smooth progress over the next two years. If successful, this move could significantly increase market confidence and attract a large pool of new investors to these emerging products.
Despite the potential for expansion, there are significant challenges due to the Chinese authorities’ reservations towards cryptocurrencies and financial innovation. Most commercial cryptocurrency activities are currently banned in mainland China, although the legality of trading and ownership by individuals is still a topic of debate.
In Hong Kong, the launch of spot Bitcoin and Ether ETFs marked a milestone for the crypto scene in Asia. However, the trading volumes for these ETFs have been lukewarm compared to the bustling ETF markets in the U.S. The unique features of these products, such as in-kind subscriptions that allow purchasing ETFs directly with Bitcoin and Ether, and temporary management fee waivers, have not attracted as much investor interest as anticipated.
During a panel at the Bitcoin Asia conference, Han expressed disappointment over the slow start but remains optimistic about the potential growth of the local market. He believes that the Hong Kong market, which he sees as more neutral and appealing to a broader Asian audience, could eventually surpass the size of its American counterparts.
As Hong Kong strives to establish a complete virtual asset ecosystem, Han predicts that the local crypto ETFs will flourish and become the largest in terms of trading volume by the end of the year. Harvest Global is also preparing to launch collateralized financial products based on these ETFs to further diversify their offerings.
The two-day Bitcoin Asia conference, held at the Kai Tak Cruise Terminal, showcased these ETFs prominently. Legislative Council member Johnny Ng opened the event with enthusiastic remarks about the ETFs, considering them a significant development in Hong Kong’s financial industry.
Despite the second-largest first-day trading volume, led by China Asset Management Company, the journey ahead for Harvest Global and the broader ETF market in Hong Kong is both promising and fraught with regulatory challenges.
