Arthur Hayes Expects Hong Kong To Disrupt Bitcoin ETF Adoption In West

BitMEX Co-Founder Arthur Hayes recently underscored Hong Kong and China’s impact on the Western adoption of U.S. Bitcoin ETFs. In a blog, he predicted potential challenges and competition for the U.S. Bitcoin ETFs in Western markets. In addition, Hayes noted that similar products are slated to be launched in the West, posing a threat to the expansion of Bitcoin ETF adoption.

Hong Kong & China To Promote Local Products

China’s plan to launch a similar ETF in the Hong Kong financial markets signifies a strategic move to capture flows within the Asia Pacific. Moreover, Hayes suggested that while China is likely to mirror the U.S. ETF model, Hong Kong’s regulatory stance may introduce complications.

Furthermore, he pointed out that Hong Kong, aiming to be a digital currency hub, will only permit its listed ETFs to trade on regulated exchanges within its jurisdiction. Hence, this limitation could impact the flexibility of fund managers in the U.S. It would restrict their ability to trade Bitcoin (BTC) at the best prices and potentially create market inefficiencies.

Hayes suggested that if Hong Kong limits fund managers to trade only on select exchanges, it could potentially create arbitrage opportunities for traders. This restriction may lead to market inefficiencies, allowing arbitrageurs to profit from price differentials between less-liquid exchanges in Hong Kong and their larger Eastern counterparts.

Also Read: Spot Bitcoin ETF: Vanguard Reps Apologizing for Crypto Stance

BlackRock: The Winner In Spot Bitcoin ETF Race

Hayes believes that the approval of a Bitcoin ETF is a financialization tactic employed by prominent institutes to keep capital within the traditional financial system. He drew parallels with the gold market, where ETFs were created to supposedly hold gold bars in vaults worldwide. Hayes added that the key player in this scenario is Blackrock, the world’s largest asset manager.

The former BitMEX CEO highlighted the strangeness of the approval process. He pointed out that the SEC denied the Winklevoss twins’ Spot Bitcoin ETF application for over a decade, while Blackrock gained approval within six months. He questioned the timing of this approval amid uncertainties in the global bond market.

In addition, he noted the possibility of central banks resorting to money printing. Thereafter, Hayes predicted that Blackrock’s Bitcoin ETF would dominate the market due to its global distribution platform. In addition, he noted that the 11 Spot Bitcoin ETFs could see inflows worth billions of dollars via TradeFi.

Also Read: BlackRock CEO Backs Ethereum ETF After Bitcoin Success