It has been suggested that Hong Kong’s digital asset (virtual asset) listed index fund (ETF) may provide a new digital asset investment route for mainland Chinese investors. The analysis is that Hong Kong digital asset ETF investment may be possible by utilizing existing overseas asset investment methods even under China’s strict capital control policy.
According to CoinDesk on the 27th (local time), at the ‘Consensus Hong Kong’ event held in Hong Kong, He Yifan, CEO of Red Date Technology, said that Hong Kong’s digital asset regulations will enable mainland Chinese investors to invest in digital assets.
Currently, China is implementing strict capital control policies to stabilize the value of the yuan (RMB) and prevent capital outflows. He Yifan said, “The core of China’s regulation is not digital assets themselves, but capital control,” and predicted, “If capital does not outflow, digital asset transactions can also be allowed within the existing financial system.”
Mainland Chinese investors can invest in overseas assets through the Qualified Domestic Institutional Investor (QDII) scheme and the Hong Kong Stock Connect Trading System. QDII is a way for Chinese institutional investors approved by the government to purchase overseas ETFs, and investors can indirectly invest in overseas assets through this. In addition, through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Program, mainland investors can trade Hong Kong stocks in yuan through Chinese securities companies.
He Yifan explained that this overseas asset investment method can also be applied to Hong Kong’s digital asset ETF. Hong Kong is introducing a sandbox model that operates digital asset ETFs under the supervision of financial authorities. He explained, “There is not much difference between existing Hong Kong stocks and digital assets,” and “If the existing overseas asset investment method is followed, digital assets can also become another regulated investment product.”
Meanwhile, Chinese financial authorities are showing a more flexible attitude than before, citing the need for digital asset research. Polymarket, a digital asset prediction market, estimated the probability of China accepting Bitcoin at 2%.