Hong Kong's financial market has witnessed another landmark development following the stablecoin licensing wave. Guotai Junan International (01788.HK) has become the first Chinese-backed brokerage in Hong Kong authorized to provide comprehensive virtual asset trading services. Clients can now trade cryptocurrencies (e.g., Bitcoin BTC, Ethereum ETH), stablecoins (e.g., USDT), and other virtual assets directly on its platform.
License Focuses on "Distribution" Services
Industry insiders involved in the licensing process revealed that multiple local brokers (e.g., Victory Securities, Eddid Securities) have upgraded their Type 1 licenses, with Guotai Junan International being just one of several Chinese-backed applicants. The brokers primarily offer distribution-based trading services rather than operating proprietary exchanges.
Key operational aspects include:
- Establishing omnibus accounts within licensed exchanges
- Providing access to mainstream compliant tokens (e.g., BTC, ETH)
- Excluding high-risk altcoins or speculative tokens
Security and Compliance as Competitive Advantages
Compared to overseas crypto exchanges like Binance or OKX, licensed brokers demonstrate distinct strengths:
Security Measures
- SFC-regulated partner exchanges
- Professional custody with insured client assets
- Rigorous token vetting processes
Compliance Standards
- Enhanced AML/KYC procedures
- Full adherence to Hong Kong laws
Current Market Limitations
However, these advantages come with trade-offs:
- Restricted selection of tradable tokens
- Shallow market depth and liquidity
- Absence of certain derivatives and trending assets
As noted by an overseas exchange representative: "Hong Kong's compliant exchanges struggle profitability due to strict regulations and limited token variety—unlike global platforms that profit from diverse listings and ICO fees."
Future Synergy with HKD Stablecoins
The impending launch of HKD stablecoins may create new opportunities. Experts highlight two critical factors:
- Distribution Channels: Licensed brokers and exchanges will become vital distribution networks for compliant stablecoins.
- Use Cases: Tokenized real-world asset (RWA) trading and virtual asset transactions will drive stablecoin adoption.
FAQ: Virtual Asset Trading via Licensed Brokers
Q1: Can mainland Chinese residents access these services?
A: No. All licensed brokers explicitly prohibit mainland residents from trading.
Q2: How does execution differ from traditional crypto exchanges?
A: Orders are routed through licensed exchanges rather than proprietary platforms, prioritizing compliance over speed.
Q3: What investor protections exist?
A: Client assets receive professional custody, insurance coverage, and regular audits.
Q4: Will more brokers enter this space?
A: Yes. Multiple institutions are upgrading licenses, suggesting future market expansion.
Q5: How might stablecoins integrate with these services?
A: Licensed brokers could become primary distribution channels, similar to Coinbase's role with USDC.
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