So, Its Now Official, That, Hong Kong's Cryptocurrency Based, ETFs. Will Certainly Not Be Available, In Mainland China... 🇨🇳 🇨🇳
Chinese authorities are wary that ETFs offer a way to bypass strict international capital controls. The HKEX has confirmed, crypto ETFs aren't available to mainland China investors, despite persistent rumors otherwise. Hong Kong's crypto ETFs, because of their unique in-kind redemption model, would offer a means to bypass mainland China's capital controls. As the listing date for Hong Kong's crypto ETF's got closer, the rumors went into overdrive that they would be available to mainland Chinese traders. That accordingly, allows mainland trading of Hong Kong equities, and then the ETFs launched, and they still aren't available.
That said, the rumors still won't cease and adding fuel to the fire was a piece in the SCMP that said these ETFs would be available to mainland traders who have Hong Kong residency and brokerage accounts. That’s certainly true, but there’s a massive caveat, it's like saying that, mainlanders with US residency can open an American brokerage account and trade New York-listed stocks (which they can’t). This doesn't mean that they are available in mainland China, as the trading, by mainlanders with Hong Kong residency, is done in Hong Kong. For this part, HKEX confirmed that they are categorically unavailable in mainland China.
#ControllingTheYuan... 💰 💰
So why is this all a big deal? Allowing mainland Chinese to trade these crypto ETFs would fly in the face of Beijing's monetary policy of controlling the ascent and descent of the Yuan (RMB). Particularly as Hong Kong authorities allow for in-kind creation and redemptions thanks to the partnerships between ETF issuers and licensed crypto exchanges in the city, which the US based SEC prohibits. China's capital controls are designed to regulate the inflow and outflow of money, preventing excessive currency fluctuations and capital flight, and maintaining the stability and value of the Yuan. Which accordingly gets China labeled a currency manipulator. Still, it remains a central part of its economic policy as its exports can remain competitively priced in global markets.
Allowing a trader to purchase shares of a crypto ETF in Yuan, then sell it for crypto, would create a very effective means of bypassing capital controls. Stablecoins already provide a gray market for this, especially for smaller enterprises in China, that need dollar liquidity to pay their international supply chain. There's no outright ban on crypto in China, only one on exchanges and using local payment rails for crypto transactions. Binance and OKX openly advertise USDT-Yuan markets on their P2P platforms run on WeChat Pay. But, liquidity offered in these markets are small, and most max out at 10K-12K RMB ($1400 -$1600), which is why it's tolerated.
#theINTRODUCTIONofCHINESEINVESTORScouldtaketheseETFStotheMOON... 🚀🚀
#hasCHINAgotSOMETHINGupotsSLEEVEthatitsHIDING... 🤷🤷
Interesting insights on the latest blockchain news!