As the much-anticipated launch of spot Bitcoin and Ether exchange-traded funds (ETFs) draws near in Hong Kong, mainland Chinese citizens find themselves excluded from participating due to stringent crypto regulations enforced years ago.

Despite the approval of spot BTC and ETH ETFs in Hong Kong, mainland Chinese investors will remain on the sidelines, unable to leverage these investment opportunities. This restriction, underscored by Bloomberg data analyst Jack Wang during a recent webinar, stems from the Chinese State Council's firm stance against crypto-related transactions, as articulated in a September 2021 directive.

Although the ETF issuers, including China Asset Management, Harvest Global Investments, and Bosera, maintain close ties with mainland China, their Hong Kong subsidiaries will be unable to extend Bitcoin or Ether exposure to investors in the mainland.

Wang emphasized the regulatory barriers, noting that even attempts to engage with futures-based crypto ETFs listed in Hong Kong are met with direct rejection from brokers. Consequently, Chinese investors are unlikely to access these products in the near term, with Wang asserting a zero probability of regulatory change in mainland China due to the ETF launch.

Thomas Zhu, head of digital assets at China Asset Management, echoed Wang's sentiments, emphasizing that mainland Chinese investors' access to crypto ETFs in Hong Kong hinges on forthcoming regulatory amendments.

However, amidst the excitement surrounding Hong Kong's ETF debut, Bloomberg analyst James Seyffart highlighted the vast disparity in assets between the U.S. and Hong Kong ETF markets. With the U.S. ETF market boasting nearly $9 trillion in assets, Seyffart underscored the significant gap compared to Hong Kong's $50 billion ETF market, emphasizing the substantial difference in size and influence between the two markets.