Two major Chinese investment funds, Harvest Fund and China Southern Fund, are applying for spot Bitcoin ETFs in Hong Kong, signalling a shift in investor interest from the US. This development comes as the US sees a moderation in Bitcoin ETF inflows, highlighting Hong Kong’s emerging role as a crypto hub. The move raises questions about long-term regulatory sustainability in Hong Kong and the potential impact on the global crypto market.

Two significant Chinese institutions, Harvest Fund and China Southern Fund, are moving forward with plans to create spot Bitcoin exchange-traded funds (ETFs) in Hong Kong, a noteworthy step in the cryptocurrency investment scene.

This calculated action is being taken when interest in spot Bitcoin ETFs in the US is dwindling, as the weekly inflows into these investment vehicles are becoming less frequent.  This change has ramifications beyond Hong Kong and China’s boundaries, possibly impacting the more general dynamics of the cryptocurrency industry worldwide.

Regulation of Cryptocurrencies in China

A strict and circumspect stance distinguishes China’s cryptocurrency regulatory environment. Several initiatives have been put in place by the Chinese government to limit the use and effect of cryptocurrencies inside its boundaries. Initial coin offers (ICOs), a well-liked means of generating capital in the cryptocurrency sector, were outlawed in China in 2017. Subsequently, local crypto exchanges faced a crackdown, which resulted in a notable decline in trading activity in the nation.

China has even tightened its control by forbidding payment processors and banking institutions from offering services associated with Bitcoin transactions. This includes limitations on creating cryptocurrency trading accounts and providing trading, clearing, settlement, and registration services. These steps are being taken to safeguard the financial system from money laundering threats and cryptocurrencies’ speculative nature.

Besides these limitations, China has adopted a robust position opposing Bitcoin mining. The government intensified its efforts in 2021 to suppress cryptocurrency mining, citing worries about the effects on the environment and energy use. As a result of this action, several mining operations were shut down, and China’s share of the global Bitcoin mining hash rate significantly decreased.

China is actively investigating the possibilities of blockchain technology despite its severe position on cryptocurrencies. It has also introduced its digital currency, the Digital Currency Electronic Payment (DCEP), commonly called the digital yuan. This digital money, with official backing, aims to improve transaction efficiency and exert more authority over the financial system.

Chinese Funds’ Application for Bitcoin ETFs

Harvest Fund and China Southern Fund, two of China’s largest investment firms, have made a significant move to broaden their investment horizons by deciding to create spot Bitcoin exchange-traded funds (ETFs) in Hong Kong. These funds’ Hong Kong-based subsidiaries are actively involved in the ETF application and deployment processes. 

Harvest Fund has clearly intended to enter this rapidly growing industry by applying to the Hong Kong Securities and Futures Commission (SFC). Harvest Fund and China Southern Fund’s debut into the Bitcoin ETF market is expected to increase significantly investor engagement in Bitcoin-related investment products, with their respective assets under management equal to $230 billion and $280 billion.

Investor Interest Shifts from US to Hong Kong

Current patterns suggest investors are becoming more interested in Hong Kong-based spot Bitcoin ETFs than US-based ones. The slowdown in weekly inflows into US spot Bitcoin ETFs, which have dropped from $862 million to $646 million in only two weeks, indicates this change. The total amount of money flowing into digital asset investment products has increased from $13.14 billion to $13.81 billion year to date, notwithstanding this brief decline.

Reputable Chinese funds’ applications for spot Bitcoin ETFs in Hong Kong may indicate strength for the cryptocurrency sector. Given its distinct connection with mainland China and its aspiration to become a premier cryptocurrency hub, Hong Kong may be able to loosen its strict regulations. 

Implications for the Crypto Market

Although Hong Kong’s cryptocurrency regulatory framework has bright futures, concerns remain over the system’s long-term viability. There are concerns regarding the future of Hong Kong’s autonomy and regulatory environment because the “One Country, Two Systems” agreement between China and Hong Kong is scheduled to expire. Experts in the field, like Bobby Lee, the founder and CEO of Ballet, have voiced concerns regarding Hong Kong’s and China’s integration in the coming decades. The favourable conditions currently enjoyed by Hong Kong’s cryptocurrency business may be affected by this unification, which could result in a unified currency and regulatory framework.


Kelly has carved a niche in the dynamic world of Web3 over the past three years, combining her talents in marketing and writing to become a standout Web3 copywriter. Her journey in this innovative field is distinguished by her profound engagement with the decentralized technology landscape. Kelly’s creative prowess, coupled with her deep understanding of Web3, enables her to create compelling narratives that resonate deeply within the blockchain community. Beyond writing, Kelly’s marketing acumen has been instrumental in elevating various Web3 marketing projects, making them prominent in the realm of digital innovation.