According to Arthur Hayes, the former CEO of BitMEX, China may be closely observing how the United States handles the pressure for a spot Bitcoin Exchange-Traded Fund (ETF) through Hong Kong. Hayes believes that if there is an economic war between the two countries, Bitcoin will benefit as the world’s largest cryptocurrency.
Is Hong Kong Considering Spot Crypto ETFs?
Hayes responded to a news report suggesting that Hong Kong may be considering approving spot crypto ETFs to become a central hub in Asia. However, it is not clear which cryptocurrency the Securities and Futures Commission (SFC) will allow for trading.
If Hong Kong follows in the footsteps of the Securities and Exchange Commission (SEC), a spot Bitcoin ETF would be the first product available for retail or institutional trading.
The SEC’s Stance on Bitcoin ETFs
As of early November 2023, the SEC has not approved any spot Bitcoin ETF applications from major Wall Street firms like Fidelity and BlackRock. Hayes speculates that BlackRock serves as a “proxy asset manager” for the United States, similar to Hong Kong’s role for China.
Hong Kong’s policy implementation on crypto can reflect China’s perception of digital assets since it is under Chinese administration. Mainland China still bans crypto trading and mining.
Potential Impact on BTC Price
SFC CEO Julia Leung stated that if regulatory concerns are addressed, Hong Kong might consider allowing retail investors to access spot ETFs linked to cryptocurrencies like Bitcoin. This coincides with efforts by American investment firms to introduce similar products in the United States despite opposition from the SEC.
It remains to be seen whether the approval of a spot Bitcoin ETF in the US will lead to more similar products in other regions, including Hong Kong. The possibility of a spot Bitcoin ETF in the leading economy has increased demand and propelled BTC to new highs in 2023.
Hot Take: China’s Interest in Bitcoin ETFs
Arthur Hayes suggests that China may be closely monitoring the United States’ handling of a spot Bitcoin ETF through Hong Kong. If an economic war between the two countries occurs, Bitcoin could benefit as the world’s largest cryptocurrency. Hong Kong’s potential approval of spot crypto ETFs aligns with efforts by American investment firms to introduce similar products in the US despite SEC opposition. Whether this approval leads to more spot Bitcoin ETFs in other regions remains to be seen. Nevertheless, news of a possible US spot Bitcoin ETF has driven up demand for BTC and pushed its price to new highs in 2023.
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