Original author: Zhou Zhou, Foresight News

“On Victory Securities’ APP, investors can already purchase cryptocurrencies directly.”

The VDX founder told me in his headquarters office in Sheung Wan, Hong Kong. VDX is an affiliate of Victory Securities (an established Hong Kong securities firm) and is currently applying for a Hong Kong cryptocurrency license. Opposite the VDX office is another cryptocurrency exchange: HKBGE. Looking out from the floor-to-ceiling windows of the office is a sea. On the other side of the sea is the urban area of ​​Kowloon and Victoria Harbour, a bustling scene.

Since this year, with Hong Kong’s support for the cryptocurrency market, more and more Hong Kong securities firms have developed cryptocurrency business, including: Futu Securities, Tiger Brokers, Victory Securities, Interactive Brokers, Nanhua Securities, Longbridge Securities, Fuqiang Securities, Huafu Construction Securities, etc., these securities firms are becoming the first institutions that can provide users with cryptocurrency services.

They are rushing into the cryptocurrency industry, hoping to bring more than 4 million Hong Kong stock investors into the world of encryption. Some predict that in the near future they will all be able to directly purchase cryptocurrency on commonly used stock trading APPs. A trend is forming, and there are already Hong Kong stock platforms opening up cryptocurrency purchases to users.

This has brought some new variables to the increasingly deserted Hong Kong stock market. Data shows that there will be 4.65 million active trading users in the Hong Kong stock market in 2022. These users are expected to be referred to Hong Kong licensed and compliant cryptocurrency exchanges such as HashKey and OSL on their familiar stock platforms. Millions or even tens of millions of Hong Kong stock users are expected to be exposed to cryptocurrencies such as Bitcoin and Ethereum from the stock platform.

This may bring (to the cryptocurrency market) tens of millions of users who trade Hong Kong stocks on these (stock) platforms. said Weng Xiaoqi, chief operating officer of HashKey Group, a licensed virtual asset exchange in Hong Kong. Recently, HashKey is negotiating with about 5 local brokerages in Hong Kong to establish an entrance related to HashKey cryptocurrency trading services. Another licensed cryptocurrency exchange, OSL, has also reached cooperation with nearly 5 brokerages. In addition, there are also some institutions in the Hong Kong securities industry that directly invest or establish an independent cryptocurrency company.

What they are looking for is not only the more than 4 million active Hong Kong stock investors and the less than 10 million Hong Kong citizens. Behind this, Asias huge and in-depth market of more than 4 billion people may be the goal they really desire.

The Eight Immortals cross the sea, each showing his magical powers

Who will become the largest cryptocurrency exchange in Hong Kong? When I asked one cryptocurrency exchange founder, his answer was Futu.

Futu was once the largest Internet brokerage in China, famous for its convenient trading of Hong Kong and US stocks. However, it has since been restricted from developing in mainland China, so it focuses on overseas markets such as Hong Kong, Singapore, and the United States. Futu Holdings currently has more than 20 million users worldwide. Futu Securities is the largest retail brokerage in Hong Kong, and its Hong Kong users account for more than 40% of the local adult population.

An industry insider revealed to Foresight News: Futu’s cryptocurrency trading system is now ready and is applying for a license from the SFC (Hong Kong Securities and Futures Commission). Futu told Foresight News: As the leading retail brokerage in Hong Kong, we will continue to pay attention to relevant developments in the industry.

According to reports and analysis, Futu’s cryptocurrency exchange in Hong Kong is called PantherTrade. It was registered in March this year, and Chen Zhihu, an executive with cryptocurrency experience, was appointed as a director in September this year. It is no longer news in the industry that Futu attaches great importance to the cryptocurrency business.

During my trip to Singapore to attend a conference, I conducted random interviews with local Singaporeans and found that some Singaporeans use Futu’s moomoo to trade cryptocurrencies. Moomoo has become one of the largest cryptocurrency trading platforms in Singapore.

Tiger Brokers is not to be outdone. Tiger and Futu, once Chinas two largest Internet brokerages, have always been in a competitive situation. Overseas, it is also actively expanding its cryptocurrency business.

According to Hong Kong Ta Kung Pao, Chen Jixian, executive director of the Institutional Department of Tiger Brokers (Hong Kong), expressed his intention to apply for a cryptocurrency trading license in April this year. The latest news in October came from Nikkei Asia (Nikkei Asia). Subsidiaries of Tiger Brokers and Futu Securities are trying to apply for a Hong Kong Virtual Asset Service Platform (VASP) license.

It is reported that Tiger Brokers has a close relationship with Hong Kong crypto exchange Yax. Yax is a platform incubated by a Tiger Brokers employee. It was established in June 2022 and the product will be officially launched in early 2023.

The securities firms entering the Hong Kong cryptocurrency market have different backgrounds and identities. In addition to Chinese Internet brokers such as Futu and Tiger who left mainland China to develop overseas, there are also Hong Kong brokers with American backgrounds such as Interactive Brokers, Hong Kong brokers with Hong Kong backgrounds such as Victory Securities, Fuqiang Securities, etc., as well as A more low-key Hong Kong securities firm with a Chinese background.

Interactive Brokers is a representative of American securities firms entering the encryption industry. After the U.S. policy supported cryptocurrency, it was among the first batch (in 2021) to develop cryptocurrency in the United States. When Hong Kong policy supported cryptocurrency, it also became the first batch (in early 2023) to develop cryptocurrency in Hong Kong. Brokerage dealers.

The cryptocurrency services provided by Interactive Brokers to users are powered by the virtual asset trading platform OSL. The commission is 0.20% - 0.30% of the transaction value, depending on the monthly trading volume, with a minimum of $2.25 per order. It is worth mentioning that users can trade virtual assets and check their balances on a single platform, Interactive Brokers. That is, a Hong Kong stock investor can trade Bitcoin, Ethereum, stocks, options, futures, bonds, mutual funds, ETFs, etc. on this stock platform.

This may become the norm in Hong Kongs securities industry in the future, that is, Hong Kong stock investors can directly purchase cryptocurrency on their own stock APP.

Unlike Interactive Brokers with a US-backed background, Victory Securities is a Hong Kong-backed securities firm listed on the Hong Kong stock market. It is also a comprehensive, fully licensed Hong Kong brokerage that provides comprehensive financial services. It is relatively active in the crypto market. Advertisement slogan It’s: “Buying stocks or coins is just as easy.”

The cryptocurrency affiliate of Victory Securities is VDX (Victory Fintech Company Limited). The founder of VDX told me that the current Victory Securities APP already supports users to purchase stocks and cryptocurrencies on one platform at the same time. He also said that compared to other cryptocurrency exchanges that have entered retail, VDX only focuses on TO B-end users.

Hong Kongs financial industry was shaken by a strong dose of medicine

Hong Kongs financial industry seems to have reached a point where it cannot return to normal without a strong dose of medicine. An executive in the Hong Kong securities industry told me that the phenomenon of zero trading in thousands of stocks recently revealed in the news has existed for a long time, but it was recently revealed that the entire Hong Kong stock market has reached a relatively bleak stage. .

Cryptocurrency seems to have become a powerful medicine in the eyes of the Hong Kong government.

Since the Hong Kong government announced its policy support for cryptocurrency on October 31 last year, in addition to Hong Kongs securities industry, banks, insurance companies, auditing companies and other Hong Kong financial industries have been stimulated by this powerful medicine and started to operate.

Taking banks as an example, since Hong Kong has supported the cryptocurrency industry, DBS Bank, Standard Chartered Bank, Zhongan Bank, etc. have actively participated in cooperation to provide users of cryptocurrency exchanges with cryptocurrency-to-fiat currency exchange services. There are currently two licensed cryptocurrency exchanges in Hong Kong: HashKey and OSL. HashKey cooperates with banks such as ZhongAn, while OSL cooperates with banks such as DBS Bank and Standard Chartered Bank.

As for Hong Kong auditing companies, they will have an additional group of clients. Almost all major audit firms in Hong Kong are currently involved in the cryptocurrency business. Take HashKey as an example. Currently, it has cooperated with three auditing companies. The external audit is KPMG, the internal audit is PwC, and the code audit is Ernst Young. Foresight News exclusively learned that OKX HK’s audit company chose another one of the Big Four audit companies: Deloitte.

In addition, insurance companies, asset management, investment institutions, etc. have also been activated by the powerful medicine of cryptocurrency. For example, in September this year, China Pacific Insurance Group’s China Pacific Insurance Investment Management (Hong Kong) Co., Ltd. was approved to upgrade the Hong Kong Securities and Futures Commission’s Type I and Type IV licenses to engage in virtual asset fund distribution and advisory services. From now on, CPIC Asset Management Hong Kong Distribution and investment advisory services can be provided to funds with an investment ratio of more than 10% in virtual assets.

Hong Kong insurance companies Aon and OneDegree are also well-known in the industry and have gradually become famous because they were the first to provide hot and cold wallet insurance services for cryptocurrency exchanges.

Hong Kongs financial industry has begun to undergo new changes.

Judging from the existing experience of the global capital market (especially the US capital market), the market potential of cryptocurrency will also provide Hong Kong’s financial industry practitioners or technical talents with new opportunities and even higher-level channels. . Especially for those talents who have combined experience in cryptocurrency and traditional financial industries, or who understand both code and cryptocurrency, they will have more opportunities to choose careers and increase their salaries.

According to multiple people familiar with the matter, Hong Kong’s cryptocurrency exchanges are competing for ROs with cryptocurrency experience, and the salaries generally offered exceed HK$2 million. Some institutions have even offered an annual salary of nearly 10 million Hong Kong dollars in order to compete for an executive who understands both technology, management and cryptocurrency. Talents in Hong Kongs financial and technology industries have also become more market-oriented and mobile.

The birth of an industry has a far-reaching impact. It is expected to affect Hong Kongs current financial industry, technological innovation industry, and education industry from all levels.

Convention and exhibition tourism and other aspects.

The author has traveled to Hong Kong many times this year and found that cryptocurrency courses have become more common in Hong Kong universities, especially in cryptocurrency-related majors such as economics and finance in the School of Economics and Management. And it’s not just the cryptocurrency and financial industries that are being stirred up.

write at the end

Hong Kong is not the first in the world to enter the cryptocurrency industry, nor is it the last in the world.

According to the authors more subjective observation, in recent years, innovations in the global capital market are often led by the United States and are transmitted to Singapore and Hong Kong in 1-3 years. This is true whether it is the SPAC listing model that exploded in the United States in 2020 (the Hong Kong Stock Exchange will welcome the first SPAC listed company in 2022) or the U.S. brokerages that have provided cryptocurrencies to users after 2020.

In many places, the integration trend of Hong Kongs securities industry and cryptocurrency industry is partially replicating the U.S. crypto financial market two years ago. The experience that many U.S. cryptocurrency companies have experienced can also be copied to other regions. Many U.S. crypto financial markets The rules that have been verified by the industry will not be completely copied, but they still have reference significance. Understanding the US cryptocurrency regulation and market development history may help you better grasp and judge the direction of Hong Kongs crypto industry in the next two years.

Take Robinhood, the largest Internet brokerage in the United States, as an example. Soon after it entered the cryptocurrency business, it launched cryptocurrency wallets, transfers and other functions, and also supports NFT purchase transactions. It has built a new non-custodial web3 wallet that gives customers complete control over their cryptocurrencies and seamless access to the decentralized web and all the opportunities cryptocurrencies have to offer.

Reuters reported that in Q4 of 2020, Robinhood had only 1.7 million cryptocurrency users. By Q1 of 2021, there were more than 9.5 million users trading cryptocurrencies on its platform. The user growth of this business is staggering. What follows is an improvement in income. Cryptocurrency has also been of great help to securities companies in improving their revenue sources and profitability. In recent years, the revenue contributed by cryptocurrency trading has consistently ranked among the top three of Robinhoods trading revenue, and has even been high for a long time. Income from stock trading. Taking Q2 of 2023 as an example, the revenue contributed by cryptocurrency trading was US$31 million, the revenue contributed by stock trading was US$25 million, and the revenue contributed by options trading was US$127 million.

Will Hong Kongs leading securities firms repeat Robinhoods success?

This may be the reason why Hong Kong brokerages have rushed in and developed cryptocurrency business. Failure to act is also an action, and may even bear greater risks.