Tech
Harvest CEO may push for bitcoin and ether ETFs on Stock Connect for mainland Chinese investors in two years
Chinese fund house Harvest Global Investments, one of three issuers of Hong Kong’s first cryptocurrency Exchange Traded Funds (ETFs), is already thinking about a future that offers mainland investors direct access to its Bitcoin and Ether products through the ETF Connect scheme. according to the company’s CEO.
Harvest “does not rule out” asking for its ETFs that invest directly in crypto tokens to be included in the connect program linking exchanges in mainland China and Hong Kong, provided “everything goes smoothly and well” over the next two years, it said. Harvest CEO Han Tongli, who also serves as the company’s chief investment officer, told the Post on Thursday on the sidelines of the Bitcoin Asia conference.
ETF Connect, launched in May 2022, offers Mainland Chinese investors access to a range of select ETFs listed in Hong Kong. It is part of the larger Stock Connect program launched in 2014, which first connects the Hong Kong and Shanghai stock exchanges.
The inclusion of crypto ETFs in the scheme could be a major confidence booster for the market and offer a large new pool of investors for nascent products. Some have questioned whether their inclusion would be allowed given Beijing’s hostile stance towards cryptocurrencies. Most cryptocurrency-related business activities are banned on the mainland, although trading and ownership between private individuals remains an ongoing legal issue.
Hong Kong’s bitcoin and ether futures ETFs, launched in 2022, were not included in Stock Connect.
Johnny Ng, a member of the Legislative Council of Hong Kong, known for his support for cryptocurrencies, delivers the keynote speech at the Bitcoin Asia conference on May 9, 2024. Photo: SCMP/Matt HaldaneHong Kong’s bitcoin and ether spot ETFs , the first of their kind in Asia, debuted last week and have been hailed as a significant move in the city’s efforts to become a crypto hub.
Companies have touted the benefits of Hong Kong products, including so-called in-kind subscriptions, or the direct purchase of ETFs with bitcoin and ether. Fund managers have offered incentives to encourage investment, such as waiving management fees for a specific period.
However, many saw the debut as disappointing, as trading volumes were a small fraction of trading in US bitcoin ETFs launched in January. Hong Kong’s ETF market is much smaller than that of the United States.
Many took a wait-and-see approach amid doubts about Hong Kong’s commitment to the virtual asset sector, which weighed on ETF trading volume, Han said, adding that he expected the products to have a “slow start.”
“People are still skeptical about Hong Kong’s special status [administrative] region,” Han said in a panel discussion on Bitcoin Asia. “It’s located in China… and a lot of people don’t want to see Hong Kong be more successful, for whatever reason.”
But Han sees greater potential for the Hong Kong market, as it is a “more neutral” region with greater appeal in Asia, and said local crypto ETFs could grow to double the size of US products.
Han declined to provide a timeline for when he thought that milestone might be reached. It depends on when Hong Kong manages to create a complete ecosystem of virtual assets, he said, but the city has already “planted a seed” by launching ETFs. Other products such as stablecoins will take longer to gain regulatory approval, he added.
Harvest’s goal at the moment is for its spot cryptocurrency ETFs to become the largest in Hong Kong in terms of trading volume by the end of this year, according to Han, as it prepares to issue secured financial products based on the ETFs .
Spot cryptocurrency ETFs were one of the main topics at the two-day Bitcoin Asia conference, which kicked off Thursday in Hong Kong at the Kai Tak Cruise Terminal. Legislative Council member Johnny Ng, known for his pro-cryptocurrency stance, opened the event with comments heralding the new financial products as “an important milestone in the development of Hong Kong’s ETF market.”
Harvest’s cryptocurrency spot ETFs had the second-largest first-day trading volume on April 30 among the three companies offering them. China Asset Management Company (ChinaAMC) had the largest.