On May 11, Harvest Global Investments, the issuer of the first batch of virtual currency ETFs in Hong Kong, plans to open Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) to Chinese investors through the Hong Kong Stock Connect. Han Tongli, CEO of Harvest Fund, revealed that if progress goes smoothly in the next two years, it is not ruled out that the company will apply to include its ETFs in the interconnection plan.

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It is reported that if this measure is implemented, it will be the first time that Chinese investors can invest in virtual currency ETFs through formal channels. According to Bitcoin Insider, this move marks an important step for Hong Kong in promoting the development of the virtual currency market, and also reflects the further deepening of China's capital market opening up to the outside world.

On May 9, 2024, the Hong Kong Spot Bitcoin and Ethereum Exchange Traded Fund Panel Discussion was successfully held, with Harvest Global Investments CEO Han Tongli in attendance.

Chinese fund company Harvest Global Investors, one of three issuers of Hong Kong’s first spot cryptocurrency exchange-traded funds (ETFs), is already considering giving mainland investors direct access to its bitcoin and ether products in the future through the ETF Connect program, according to the company’s CEO.

As long as “everything goes well” over the next two years, Harvest “would not rule out” applying to have its ETF that directly invests in crypto tokens included in the Stock Connect program linking mainland China and Hong Kong exchanges, Harvest CEO and the firm’s chief investment officer told The Washington Post on the sidelines of the Bitcoin Asia conference on Thursday.


Harvest Global Investors CEO Han Tongli (center) speaks during a panel discussion on spot bitcoin and ether exchange-traded funds at Bitcoin Asia in Hong Kong on May 9, 2024. Photo: SCMP/Matt Haldane

ETF Connect was launched in May 2022, giving mainland investors access to a select group of ETFs listed in Hong Kong. It is part of the larger Shanghai-Hong Kong Stock Connect scheme, which was launched in 2014 and first linked the Hong Kong and Shanghai stock exchanges.

Including a crypto ETF in the program could be a huge boost to market confidence and provide a flood of new investors for the emerging product. Some have questioned whether its inclusion would be allowed given Beijing’s hostile stance toward cryptocurrencies. Most commercial crypto activity is banned in mainland China, although trading and ownership between individuals remains an ongoing legal issue.

Hong Kong’s Bitcoin and Ethereum futures ETFs, which were launched in 2022, have not yet been included in the Shanghai-Hong Kong Stock Connect.

Hong Kong’s bitcoin and ether spot ETFs, the first of their kind in Asia, debuted last week and were hailed as a major step in the city’s efforts to become a cryptocurrency hub.

Companies tout the advantages of Hong Kong products, including so-called physical subscriptions, or buying ETFs directly with bitcoin and ether. Fund managers offer incentives to drive investment, such as waiving management fees for certain periods.

However, many viewed the debut as a disappointment, as trading volumes were a fraction of those of the U.S. bitcoin ETF that launched in January. Hong Kong’s ETF market is much smaller than that of the United States.

Many people have chosen to wait and see due to doubts about Hong Kong's commitment to the virtual asset sector, weighing on ETF trading volumes, Han said, adding that he expects the products to be "slow to start."

“People are still skeptical about Hong Kong’s status as a special [administrative] region,” Han said during a Bitcoin Asia panel discussion. “It’s located in China… For whatever reason, many people don’t want to see Hong Kong become more successful.”

But Han sees greater potential in the Hong Kong market because it is a “more neutral” region that is more attractive in Asia, and he said local crypto ETFs could grow to twice the size of U.S. products.

Han declined to give a timeline for when he thinks the milestone could be reached. He said it depends on when Hong Kong can build a complete virtual asset ecosystem, but that the city has already “sown the seeds” by launching ETFs. He added that other products such as stablecoins will take more time to get regulatory approval.

Han said Harvest’s current goal is to make its spot crypto ETF the most traded exchange in Hong Kong by the end of this year as the company prepares to issue ETF-based collateralized financial products.

Spot crypto ETFs were a major topic at the two-day Bitcoin Asia conference, which opened Thursday at Hong Kong’s Kai Tak Cruise Terminal. Johnny Ng, a lawmaker known for his supportive stance on cryptocurrencies, opened the event with comments calling the new financial products “an important milestone in the development of Hong Kong’s ETF market.”

On April 30, Harvest’s spot crypto ETF had the second-largest first-day trading volume among the three companies offering such ETFs. ChinaAMC was the largest.