Hong Kong Will Slow Bitcoin ETF Adoption In The West, Says Arthur Hayes

(CTN News) – Arthur Hayes recently discussed how Hong Kong and China are impacting Bitcoin ETFs. According to him, there could be challenges and competition for U.S. ETFs of Bitcoin in Western markets.

Further, Hayes noted that similar products will be launched in the West, posing a threat to the adoption of Bitcoin ETFs.

Chinese and Hong Kong products will be promoted

A similar ETF will be launched in Hong Kong markets as part of China’s strategy to capture Asia Pacific flows. Hayes pointed out that while China is likely to follow the U.S. ETF model, Hong Kong’s regulatory stance may complicate the process.

Moreover, he pointed out that Hong Kong, which aims to become a digital currency hub, will only allow its listed ETFs to trade on regulated exchanges within its jurisdiction.

Fund managers in the United States may be limited in their flexibility due to this limitation. This would limit their ability to trade Bitcoin (BTC) at the best price and potentially create inefficiencies in the market.

Hayes suggested that Hong Kong could potentially provide arbitrage opportunities for traders if it limited fund managers’ trading to only certain exchanges. Consequently, arbitrageurs may be able to profit from price differentials between less-liquid exchanges in Hong Kong and their larger eastern counterparts.

The approval of a Bitcoin ETF, according to Hayes, is a financialization tactic employed by prominent institutions to keep capital within the traditional financial system.

A similar situation exists in the gold market, where ETFs are allegedly holding gold bars in vaults worldwide. Among the key players in this scenario is Blackrock, the largest asset manager in the world.

An ex-BitMEX CEO pointed out that the approval process was strange. Blackrock gained approval within six months while the SEC denied the Winklevoss twins’ Spot Bitcoin ETF application for over a decade. Amidst uncertainty in the global bond market, he questioned this approval’s timing.

He added that a central bank might also resort to printing money. As a result of Blackrock’s global distribution platform, Hayes predicted that its Bitcoin ETF would dominate the market. Additionally, TradeFi could bring inflows worth billions of dollars to the 11 Spot Bitcoin ETFs.

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