Introduction: A Missed Opportunity in a Global Race

Cryptocurrencies such as Bitcoin are marching into the mainstream financial systems. Since 2017, however, China’s mainland has imposed strict prohibitions on crypto trading and mining. Meanwhile, the United States, Canada, Europe, and even China’s own Hong Kong have rolled out regulated Bitcoin exchange-traded funds (ETFs) to satisfy investor demand and to treat Bitcoin as a strategic reserve asset. The blanket ban on the mainland may preserve short-term financial order, yet it risks forfeiting long-term strategic advantages.

This article argues that China should promptly legalize Bitcoin ETFs on the mainland, enabling residents to invest in and hold crypto through compliant financial products. Such a move would (1) channel private capital into a de-facto national strategic reserve, (2) satisfy genuine market demand, (3) curb the risks of underground trading, and (4) leverage Hong Kong’s regulatory strengths to create a win-win-win for the state, investors, and Hong Kong.

Global Trend: Bitcoin as Strategic Reserve

On-chain data and legal filings show that governments worldwide now hold roughly 463,000 BTC—about 2.3 % of total supply—worth tens of billions of U.S. dollars in sovereign wealth.

• United States: Via enforcement actions (e.g., Silk Road), the U.S. government seized nearly 200,000 BTC. In March 2025 a presidential executive order formally designated these coins as strategic reserves, ending the prior practice of auctioning them.

• China: In 2019, Chinese authorities confiscated over 190,000 BTC during the PlusToken crackdown—one of the largest crypto seizures ever. Despite the trading ban, analysts believe Beijing still controls a significant share, making China potentially the second-largest sovereign Bitcoin holder.

• Other nations: Bhutan’s sovereign fund has mined more than 12,000 BTC, equivalent to over 30 % of its GDP. The U.K. police once seized 61,000 BTC and debated holding them long term. Ukraine and others are quietly accumulating.

From speculative tokens to “digital gold,” Bitcoin is becoming a strategic resource in the eyes of governments.

Capital Markets Embrace Bitcoin ETFs

Canada approved the world’s first physical Bitcoin ETF (Purpose Bitcoin ETF) in 2021. By early 2025 its assets under management (AUM) had reached CAD 2.6 billion, followed by more than ten additional crypto ETFs covering Bitcoin and Ethereum.

Europe’s first spot-Bitcoin ETF, launched by London-based Jacobi, listed on Euronext Amsterdam in August 2023.

Most dramatically, the U.S. Securities and Exchange Commission (SEC) green-lit spot-Bitcoin ETFs in January 2024. By November 2024, U.S. Bitcoin ETFs had surpassed USD 100 billion in net assets—approaching the size of traditional gold ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) alone attracted USD 74.9 billion in under eleven months, earning BlackRock USD 187 million in first-year management fees.

Bitcoin’s price followed suit: it broke USD 100,000 in late 2024 and recently hit a new all-time high of USD 120,000. Regulated products unlocked massive pent-up demand and cemented Bitcoin’s status as the “king of digital assets.”

If China persists in a blanket ban, it will fall behind in this emerging strategic race. Approving Bitcoin ETFs now would allow Chinese investors and capital markets to catch up and even take the lead.

Investor Appetite: High-Net-Worth Individuals and Corporates Seek Compliant Access

Over the past decade, Bitcoin’s price has risen more than 26,000 %, delivering an annualized return of roughly 230 %—far outpacing equities or gold. Academic VAR models show Bitcoin reacts positively to inflation shocks, confirming its role as an inflation hedge—akin to gold, yet with a fixed supply and no single monetary authority.

Globally, listed companies such as MicroStrategy (150,000+ BTC) and Tesla hold Bitcoin on their balance sheets. Chinese high-net-worth individuals and corporates are equally eager. With domestic equities sluggish and real estate turbulent, large pools of RMB capital are searching for new outlets. Hong Kong’s newly launched Bitcoin ETFs already serve as a legal gateway for these investors.

Yet, absent a legal onshore route, demand is forced underground. Despite the ban, mainland China still accounts for ~10 % of global mining hash-rate, and at least 8 % of FTX’s users were from the mainland—evidence that investors use VPNs or OTC desks to trade. These gray channels expose investors to fraud, exchange collapses, and capital-flight risks.

A state-supervised Bitcoin ETF would satisfy demand while curbing risk: licensed custodians hold the underlying coins, trades are transparent, and regulators can monitor flows and levy taxes—turning a shadow market into a regulated one.

Seizing the Hong Kong Opportunity: A Three-Way Win

Hong Kong’s 2023 virtual-asset regime allows regulated exchanges to serve retail clients and has approved multiple spot-Bitcoin and spot-Ethereum ETFs issued by China-affiliated managers such as ChinaAMC, E Fund, and Bosera. The Hong Kong Monetary Authority and Securities & Futures Commission have openly supported making Hong Kong a global crypto hub.

Mainland China can leverage “one country, two systems.” In early 2025, the PBoC and other ministries expanded the Cross-Boundary Wealth Management Connect program, enabling Greater Bay Area residents to purchase “eligible investment products” in Hong Kong and Macau. Although crypto ETFs are not yet explicitly listed, the policy creates room for inclusion.

Structurally, RMB-denominated funds would flow through official channels into Hong Kong-listed ETFs, without violating the mainland’s ban on domestic crypto trading. The arrangement mirrors QDII or Stock Connect schemes—legal outbound investment in an overseas product whose underlying happens to be Bitcoin.

Triple Win:

1. National Strategy: Chinese citizens voluntarily hold Bitcoin via ETFs, creating a de-facto strategic reserve without state expenditure. Regulators can require full disclosure of custodianship, ensuring visibility and even emergency access.

2. Investors: A standardized ETF offers professional custody, legal protection, and portfolio diversification. Investors no longer grapple with private-key management or counter-party risk.

3. Hong Kong & Markets: Inflows from the mainland deepen liquidity, cement Hong Kong’s status as a crypto hub, and attract global projects—aligning with Beijing’s directive for Hong Kong to “pilot first” in digital assets.

Crucially, the mainland can maintain its prohibitions on domestic issuance, trading, or payment in crypto, while treating Bitcoin ETFs as just another overseas security. By imposing quotas, investor-qualification thresholds, and disclosure rules, regulators can embrace innovation within a controlled sandbox.

Former PBoC adviser Huang Yiping has warned that a permanent crypto ban could cost China vital financial-innovation opportunities. Approving Bitcoin ETFs is a pragmatic step toward a balanced, future-ready regulatory framework.

Conclusion: Ride the Wave, Don’t Fight the Tide

The next wave of financial innovation—digital assets on blockchains—is unstoppable. While safeguarding financial stability, China must also participate in and even lead this transformation.

When major economies have already opened the door to crypto investment, China cannot afford to stand aside. Bitcoin ETFs are not a menace to be feared but waters to be navigated. As water can both float and sink a boat, the key lies in guidance and governance.

We believe China can protect financial stability while seizing historic crypto-finance opportunities. Accelerating the legalization of Bitcoin ETFs on the mainland is a sensible move that aligns with global trends and domestic demand. It lets private capital shoulder part of the national strategic reserve, offers investors an inflation hedge, and reinforces Hong Kong’s financial-center status—delivering a dual dividend for both nation and region.

Of course, prudence is essential. Begin with a Greater Bay Area pilot, cap investment quotas, and roll out investor education to curb speculation. Simultaneously, accelerate the drafting of crypto-specific laws to provide clear rules and red lines. Iterate through experimentation and refinement. In doing so, China can deploy cutting-edge tools to serve its development strategy, gaining first-mover advantage in tomorrow’s financial competition—while safeguarding investors, deepening markets, and stockpiling strategic assets.

Introduction: A Missed Opportunity in a Global Race

Cryptocurrencies such as Bitcoin are marching into the mainstream financial systems. Since 2017, however, China’s mainland has imposed strict prohibitions on crypto trading and mining. Meanwhile, the United States, Canada, Europe, and even China’s own Hong Kong have rolled out regulated Bitcoin exchange-traded funds (ETFs) to satisfy investor demand and to treat Bitcoin as a strategic reserve asset. The blanket ban on the mainland may preserve short-term financial order, yet it risks forfeiting long-term strategic advantages.

This article argues that China should promptly legalize Bitcoin ETFs on the mainland, enabling residents to invest in and hold crypto through compliant financial products. Such a move would (1) channel private capital into a de-facto national strategic reserve, (2) satisfy genuine market demand, (3) curb the risks of underground trading, and (4) leverage Hong Kong’s regulatory strengths to create a win-win-win for the state, investors, and Hong Kong.

Global Trend: Bitcoin as Strategic Reserve

On-chain data and legal filings show that governments worldwide now hold roughly 463,000 BTC—about 2.3 % of total supply—worth tens of billions of U.S. dollars in sovereign wealth.

• United States: Via enforcement actions (e.g., Silk Road), the U.S. government seized nearly 200,000 BTC. In March 2025 a presidential executive order formally designated these coins as strategic reserves, ending the prior practice of auctioning them.

• China: In 2019, Chinese authorities confiscated over 190,000 BTC during the PlusToken crackdown—one of the largest crypto seizures ever. Despite the trading ban, analysts believe Beijing still controls a significant share, making China potentially the second-largest sovereign Bitcoin holder.

• Other nations: Bhutan’s sovereign fund has mined more than 12,000 BTC, equivalent to over 30 % of its GDP. The U.K. police once seized 61,000 BTC and debated holding them long term. Ukraine and others are quietly accumulating.

From speculative tokens to “digital gold,” Bitcoin is becoming a strategic resource in the eyes of governments.

Capital Markets Embrace Bitcoin ETFs

Canada approved the world’s first physical Bitcoin ETF (Purpose Bitcoin ETF) in 2021. By early 2025 its assets under management (AUM) had reached CAD 2.6 billion, followed by more than ten additional crypto ETFs covering Bitcoin and Ethereum.

Europe’s first spot-Bitcoin ETF, launched by London-based Jacobi, listed on Euronext Amsterdam in August 2023.

Most dramatically, the U.S. Securities and Exchange Commission (SEC) green-lit spot-Bitcoin ETFs in January 2024. By November 2024, U.S. Bitcoin ETFs had surpassed USD 100 billion in net assets—approaching the size of traditional gold ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) alone attracted USD 74.9 billion in under eleven months, earning BlackRock USD 187 million in first-year management fees.

Bitcoin’s price followed suit: it broke USD 100,000 in late 2024 and recently hit a new all-time high of USD 120,000. Regulated products unlocked massive pent-up demand and cemented Bitcoin’s status as the “king of digital assets.”

If China persists in a blanket ban, it will fall behind in this emerging strategic race. Approving Bitcoin ETFs now would allow Chinese investors and capital markets to catch up and even take the lead.

Investor Appetite: High-Net-Worth Individuals and Corporates Seek Compliant Access

Over the past decade, Bitcoin’s price has risen more than 26,000 %, delivering an annualized return of roughly 230 %—far outpacing equities or gold. Academic VAR models show Bitcoin reacts positively to inflation shocks, confirming its role as an inflation hedge—akin to gold, yet with a fixed supply and no single monetary authority.

Globally, listed companies such as MicroStrategy (150,000+ BTC) and Tesla hold Bitcoin on their balance sheets. Chinese high-net-worth individuals and corporates are equally eager. With domestic equities sluggish and real estate turbulent, large pools of RMB capital are searching for new outlets. Hong Kong’s newly launched Bitcoin ETFs already serve as a legal gateway for these investors.

Yet, absent a legal onshore route, demand is forced underground. Despite the ban, mainland China still accounts for ~10 % of global mining hash-rate, and at least 8 % of FTX’s users were from the mainland—evidence that investors use VPNs or OTC desks to trade. These gray channels expose investors to fraud, exchange collapses, and capital-flight risks.

A state-supervised Bitcoin ETF would satisfy demand while curbing risk: licensed custodians hold the underlying coins, trades are transparent, and regulators can monitor flows and levy taxes—turning a shadow market into a regulated one.

Seizing the Hong Kong Opportunity: A Three-Way Win

Hong Kong’s 2023 virtual-asset regime allows regulated exchanges to serve retail clients and has approved multiple spot-Bitcoin and spot-Ethereum ETFs issued by China-affiliated managers such as ChinaAMC, E Fund, and Bosera. The Hong Kong Monetary Authority and Securities & Futures Commission have openly supported making Hong Kong a global crypto hub.

Mainland China can leverage “one country, two systems.” In early 2025, the PBoC and other ministries expanded the Cross-Boundary Wealth Management Connect program, enabling Greater Bay Area residents to purchase “eligible investment products” in Hong Kong and Macau. Although crypto ETFs are not yet explicitly listed, the policy creates room for inclusion.

Structurally, RMB-denominated funds would flow through official channels into Hong Kong-listed ETFs, without violating the mainland’s ban on domestic crypto trading. The arrangement mirrors QDII or Stock Connect schemes—legal outbound investment in an overseas product whose underlying happens to be Bitcoin.

Triple Win:

1. National Strategy: Chinese citizens voluntarily hold Bitcoin via ETFs, creating a de-facto strategic reserve without state expenditure. Regulators can require full disclosure of custodianship, ensuring visibility and even emergency access.

2. Investors: A standardized ETF offers professional custody, legal protection, and portfolio diversification. Investors no longer grapple with private-key management or counter-party risk.

3. Hong Kong & Markets: Inflows from the mainland deepen liquidity, cement Hong Kong’s status as a crypto hub, and attract global projects—aligning with Beijing’s directive for Hong Kong to “pilot first” in digital assets.

Crucially, the mainland can maintain its prohibitions on domestic issuance, trading, or payment in crypto, while treating Bitcoin ETFs as just another overseas security. By imposing quotas, investor-qualification thresholds, and disclosure rules, regulators can embrace innovation within a controlled sandbox.

Former PBoC adviser Huang Yiping has warned that a permanent crypto ban could cost China vital financial-innovation opportunities. Approving Bitcoin ETFs is a pragmatic step toward a balanced, future-ready regulatory framework.

Conclusion: Ride the Wave, Don’t Fight the Tide

The next wave of financial innovation—digital assets on blockchains—is unstoppable. While safeguarding financial stability, China must also participate in and even lead this transformation.

When major economies have already opened the door to crypto investment, China cannot afford to stand aside. Bitcoin ETFs are not a menace to be feared but waters to be navigated. As water can both float and sink a boat, the key lies in guidance and governance.

We believe China can protect financial stability while seizing historic crypto-finance opportunities. Accelerating the legalization of Bitcoin ETFs on the mainland is a sensible move that aligns with global trends and domestic demand. It lets private capital shoulder part of the national strategic reserve, offers investors an inflation hedge, and reinforces Hong Kong’s financial-center status—delivering a dual dividend for both nation and region.

Of course, prudence is essential. Begin with a Greater Bay Area pilot, cap investment quotas, and roll out investor education to curb speculation. Simultaneously, accelerate the drafting of crypto-specific laws to provide clear rules and red lines. Iterate through experimentation and refinement. In doing so, China can deploy cutting-edge tools to serve its development strategy, gaining first-mover advantage in tomorrow’s financial competition—while safeguarding investors, deepening markets, and stockpiling strategic assets.