Two cryptocurrency platforms, each associated with mainland online securities brokers, are gearing up to apply for retail trading licenses in Hong Kong. These platforms previously facilitated mainland customers’ investments in offshore assets, such as U.S. stocks, until they were instructed by Chinese securities regulators to halt “illegal cross-border business” in December of the previous year.
One of the contenders is Yax, a platform incubated by employees at UP Fintech Holding, known as Tiger Brokers. The other is PantherTrade, with connections to Futu, a company supported by Chinese tech giant Tencent. Tiger Brokers is backed by smartphone manufacturer Xiaomi.
Both companies are preparing to submit applications for a virtual asset service platform (VASP) license in Hong Kong, allowing them to operate a cryptocurrency exchange for retail customers, a practice banned on the mainland. The application process requires third-party assessments, a prerequisite before the Securities and Futures Commission (SFC) will consider their applications, although there is no set timeline for these official submissions.
Industry sources suggest that these companies are determined to proceed with their applications, and one source mentioned that Tiger Brokers may also offer cryptocurrencies to clients through its Hong Kong brokerage business.
Multiple other exchange platforms have already applied for the same license, while one company withdrew its application.
OneDegree, the sole licensed insurer for digital assets in Asia, noted a notable increase in companies seeking VASP licenses, including traditional finance companies. They believe this diverse group of applicants, with established user bases and prior compliance experience, will contribute to educating the mass market.
The SFC’s decision to publicize the names of companies submitting license applications aims to enhance transparency in the industry following a scandal involving the disappearance of over HKD 1.5 billion ($190 million) in virtual assets from the JPEX exchange.
As of now, only two cryptocurrency exchanges, OSL and Hashkey, have received SFC approval. Other online brokers have been considering license applications since late last year, but many are awaiting further regulatory clarity before moving forward.
Mainland China has maintained its ban on cryptocurrency trading, while Hong Kong has leveraged the “one country, two systems” approach to allow retail trading of cryptocurrencies. Hong Kong’s growing role in the cryptocurrency market has even garnered attention from mainland officials, with government representatives participating in crypto networking events and signaling a shift toward more open attitudes toward digital assets. According to blockchain data provider Chainalysis, Hong Kong recorded approximately $64 billion in cryptocurrency transactions between July 2022 and June 2023, while mainland China saw $86.4 billion in transactions during the same period.
A spokesperson for Tiger Brokers confirmed that Yax is an independent entrepreneurial project developed internally by Tiger Brokers. PantherTrade was established in March, and a corporate registry indicates that Chen Zhihu, an individual with cryptocurrency expertise, was appointed director in September. Sources suggest that Chen joined Futu in May. Futu has not confirmed or denied ownership of PantherTrade and continues to monitor government policy updates and industry trends. Hong Kong is positioning itself as a virtual asset hub to adapt to a changing economic landscape, receiving support from Chinese authorities for its endeavors.
