Chinese Media Issues Major Warning: Mainland Chinese Investors "Cannot Buy or Sell" Hong Kong Bitcoin Spot ETF!

According to China's financial news outlet "Caixin," the first batch of Bitcoin and Ethereum spot ETFs will be listed in Hong Kong at the end of April, emphasizing that "mainland Chinese investors cannot buy or sell" these products. The article highlights that the opening of physical redemption channels has expanded the demand for Hong Kong's virtual asset spot ETFs, but controlling money laundering risks is a critical component.

Many people associate Hong Kong's virtual asset ETFs with Chinese investors, especially since Hong Kong companies under Chinese public mutual funds have submitted ETF applications. Therefore, many believe that virtual asset ETFs listed in Hong Kong will become a legal investment channel for Chinese investors in cryptocurrencies, attracting substantial funds from mainland China.

However, a joint circular issued by the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority in December 2023 states, "Whether it is the virtual asset futures ETFs currently on the Hong Kong market or the virtual asset spot ETFs that will be issued in the future, they cannot be sold to retail investors in places like mainland China where the sale of virtual asset-related products is prohibited."

It is noteworthy that mainland Chinese individuals holding Hong Kong identity cards can still participate in transactions of virtual asset spot ETFs under compliant conditions, even if they are not permanent residents of Hong Kong. The two ETFs issued by ChinaAMC (Hong Kong) not only have counters in Hong Kong dollars and US dollars but also introduced counters in Renminbi.

The first batch of six virtual asset spot ETFs issued by Bosera International, ChinaAMC (Hong Kong), and Harvest International have been officially approved by the Hong Kong SFC, aiming for a listing on April 30. Although the ETFs are initially offered by Hong Kong companies under Chinese public mutual funds, it should be noted that mainland Chinese investors are currently not allowed to participate in trading.

On the official website of the Hong Kong SFC, the list includes ChinaAMC Bitcoin ETF (BUU163) with stock codes 03042, 09042, 83042; ChinaAMC Ethereum ETF (BUU164) with stock codes 03046, 09046, 83046; Bosera HashKey Bitcoin ETF (BUU104) with stock codes 03008, 09008; Bosera HashKey Ethereum ETF (BUU105) with stock codes 03009, 09009; Harvest Bitcoin Spot ETF (BUT244) with stock codes 03439, 09439; Harvest Ethereum Spot ETF (BUU885) with stock codes 03179, 09179.

According to China News Service, the Anti-Money Laundering Law amendment draft was submitted for the first review by the Standing Committee of the 14th National People's Congress on Wednesday. The draft consists of seven chapters and 62 articles, establishing anti-money laundering monitoring and analysis institutions under the State Council, monitoring anti-money laundering funds, and responsible for receiving and analyzing large transaction and suspicious transaction reports.

Reportedly, the current Anti-Money Laundering Law has been in effect since January 1, 2007, but in recent years, issues have surfaced such as insufficient anti-money laundering obligation fulfillment by relevant institutions, ineffective anti-money laundering regulatory cooperation mechanisms, low levels of information sharing, and the need to enhance monitoring and control of new types of money laundering risks, as well as combating corruption, cross-border gambling, and illegal "underground banking" activities.

Professor Wang Xin from Peking University Law School, who participated in the discussion of the Anti-Money Laundering Law amendment draft, mentioned in an interview in January that addressing money laundering issues related to virtual assets is currently the most critical, urgent, and necessary issue to be resolved at the legal level.

Yan Lixin, Executive Director of the Anti-Money Laundering Research Center at Fudan University, commented that using cryptocurrencies and virtual assets for money laundering has gradually become a mainstream trend, but Chinese law still lacks a clear definition of the connotation and extension of virtual assets.