Guotai Junan Securities Approved for Virtual-Asset Trading in Hong Kong Shares Surge 200%

Guotai Junan Securities (Hong Kong), a subsidiary of Guotai Junan International, has received approval from the Securities and Futures Commission to offer virtual-asset trading services. This makes it the first Chinese mainland brokerage in Hong Kong to provide such services. The brokerage firm upgraded its Type 1 license for dealing in securities to include virtual-asset trading, allowing access to major cryptocurrencies like Bitcoin and Ethereum.

The approval was granted on Tuesday, and the firm’s Type 1 license for dealing in securities was upgraded to provide virtual-asset dealing services under an omnibus account arrangement with SFC-licensed platforms. This upgrade allows the brokerage’s clientele to access trading in major digital currencies, including Bitcoin, Ethereum, and stablecoins like USDT.

Investors reacted positively to the news, driving Guotai Junan International’s shares up by nearly 200%. The stock closed at HK$3.7 (47 US cents) on Wednesday. Hua Chuang Securities revealed that the SFC approval was granted sooner than expected and has predicted that in the future, when more mainland brokerages with international branches try to upgrade their Type 1 licenses, things will move at a similar pace.

The firm expects more leading brokerages, especially those with a strong client base, to consider expanding their respective businesses to cover digital assets. Hong Kong is widely acknowledged for its favorable conditions, which make Hua Chuang Securities confident in the potential of the city to continue improving its virtual-asset ecosystem.

This sentiment was echoed in a report, which noted that stablecoins have the potential to influence the upscaling of Chinese brokerages’ international operations, as current regulations prevent them from conducting virtual asset-related business on the mainland. It believes stablecoin development could redefine the role of brokerages, promote asset securitization, and act as hubs for cross-border clearings in the future, instead of simply as trading intermediaries. This would help enhance these firms’ valuations.

Terence Chong Tai-leung, executive director of the Lau Chor Tak Institute of Global Economics and Finance at the Chinese University of Hong Kong, also agrees and has said the proliferation of virtual asset trading services in Hong Kong — whether they are backed by mainland, local, or foreign funds — will benefit the city’s finance and fintech space.

Businesses in Hong Kong are increasingly getting curious about investing in crypto, and it’s all thanks to the city’s favorable regulations. The regulations are reportedly nudging players previously watching from the sidelines to join in the fun, and several have answered the call. Among the recent crop of investors to take an interest in digital address is the money manager, known as VMS Group. The multifamily office with just under $4 billion in assets under management reportedly plans to allocate up to $10 million to strategies run by decentralized-finance hedge fund Re7 Capital, according to its managing partner, Elton Cheung. The decision is part of the firm’s recent moves to diversify into more liquid investments, an attempt to upgrade from focusing only on private equity and other longer-duration strategies, the playbook it has stuck with since it was founded two decades ago. Those investments performed well, but such assets have become less liquid as more companies opt to stay private for longer, making it more difficult to exit.