New Chinese investment guidelines aimed at opening financial markets have raised hopes that mainland residents in the Greater Bay Area could soon invest in cryptocurrency-related products in Hong Kong such as bitcoin exchange traded funds (ETFs).
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The People’s Bank of China (PBOC) and four other financial regulators announced on Wednesday that they will “optimise” the Cross-boundary Wealth Management Connect scheme in the bay area and support mainland residents in the region in purchasing “eligible investment products” offered by financial institutions in Hong Kong and Macau. They also plan to expand the scope of participating institutions and qualified products.
The measures do not mention cryptoassets in Hong Kong specifically, but the city has launched a number of ETF products that invest directly in bitcoin and ether in its pursuit of becoming a virtual asset hub. Mainland investors are currently barred from trading crypto, but the new regulation raises the possibility of a narrow legal channel for such investments.
The guidelines provide potential opportunities for the crypto and blockchain industry, according to Liu Honglin, founder of Shanghai-based Mankun law firm, which specialises in blockchain issues. It is “only a matter of time” before bay area mainland residents are allowed to access cryptocurrency ETFs, the lawyer told the Post on Thursday.
Mainland Chinese citizens’ appetite for virtual assets has grown along with bitcoin’s ascent into a “mainstream alternative asset”, Liu said. Faced with increasing investor demand, Chinese regulators may look to “channel the flow” to Hong Kong, he added.
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Jill Wong, partner at the Hong Kong law firm Reed Smith Richards Butler, also said there were “encouraging signs of re-evaluation of crypto in mainland China”, but noted that it was not obvious that the new measures would necessarily extend to cryptoassets.