Event Overview
On June 24, 2025, Guotai Junan International (01788.HK) announced it had obtained a Hong Kong virtual asset license, triggering an 80% stock surge and intensifying market focus on licensed crypto service providers. The company now joins a select group of Hong Kong-listed firms with similar approvals, including OSL and US-listed competitors like Futu Holdings (FUTU.US) and UP Fintech (TIGR.US).
License Upgrade Details
- Expanded Services: Upgraded its “Type 1 Securities License” to include:
- Direct trading of BTC, ETH, and stablecoins like USDT
- Virtual asset investment advisory
- Distribution of tokenized securities and OTC derivatives
- Strategic Timing: Aligns with Hong Kong’s 2025 “A-S-P-I-Re” regulatory roadmap and upcoming stablecoin legislation (effective August 2025).
Market Frenzy Explained
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Why Guotai Junan Stood Out
- State-Backed Advantage
- 74% owned by Shanghai SASAC (Municipal State-Owned Assets Supervision Agency)
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Part of China’s RMB 10B fintech innovation fund initiative
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Access to Mainland Capital
- As a Hong Kong Connect constituent, it channels A-share liquidity into港股通
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Contrasts with Futu’s NASDAQ listing, which lacks mainland investor access
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First-Mover Symbolism
- First Chinese broker authorized for end-to-end virtual asset services (trading + distribution + advisory)
Opportunities and Challenges for Licensed Players
| Factor | Opportunity | Risk |
|---|---|---|
| Regulatory Compliance | Enhanced trust from institutional investors | Limited to offshore clients (non-mainland) |
| Infrastructure | Partnership with HashKey/OSL reduces tech costs | Over-reliance on third-party platforms |
| Market Liquidity | Potential RMB 1T offshore liquidity pool | Narrow trading spreads vs. global exchanges |
Operational Hurdles
- Client Restrictions: Services unavailable to mainland residents due to China’s crypto ban
- Complex onboarding: Requires Hong Kong residency, tax documentation, and offshore banking access
- Liquidity Fragmentation: Most volume remains on global platforms like Binance/Coinbase
Hidden Risks in the Broker-Exchange Model
While Guotai Junan’s partnership with HashKey (a licensed VATP) ensures compliance, it introduces systemic vulnerabilities:
– Monopoly Dependence: Only 2 SFC-licensed platforms (HashKey/OSL) exist, creating:
– Price inefficiencies vs. global markets
– Single points of failure for trading/clearing
– Brand-Infrastructure Split: Brokers control client relationships but lack custody/tech autonomy
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Hong Kong’s Regulatory Vision
The approval signals Hong Kong’s strategy to:
1. Position itself as a compliant virtual asset hub
2. Pilot tokenized traditional assets (bonds, structured notes)
3. Leverage offshore RMB pools for stablecoin innovation
Future Outlook
- Potential inclusion of mainland QDI investors via regulated channels
- Rising competition as brokers pursue independent VATP licenses
FAQ
Q: Can mainland Chinese investors trade crypto through Guotai Junan?
A: No. Despite its Chinese ownership, services are restricted to non-mainland clients under current regulations.
Q: Why did HSK (HashKey’s token) surge 50%?
A: Brokers’ reliance on HashKey for backend services boosted demand expectations.
Q: How does this impact Bitcoin’s price?
A: Indirectly—it validates institutional crypto adoption but doesn’t alter BTC’s supply/demand dynamics.
Q: Are other brokers likely to follow?
A: Yes. Victory Securities and Eddid Securities are already upgrading Type 1 licenses.
Q: What’s the biggest operational challenge?
A: Balancing compliance costs with competitive trading fees against global exchanges.
Q: Will this affect US-listed Chinese brokers?
A: Possibly. Firms like Futu may accelerate Hong Kong licensing to capture institutional flows.