Author: Aki Chen, Wu Blockchain
The contents of this article are a comprehensive compilation of public information, do not represent Wu Shuo’s views, and do not provide any investment advice. Readers are requested to strictly abide by local laws and regulations and not participate in illegal financial activities.
Event Review
On June 24, Guotai Junan International (01788.HK) announced that it had obtained a Hong Kong virtual asset license, and its share price soared by more than 80%, which attracted the market's attention to this field. According to statistics, among the listed companies, there are only four companies that hold Hong Kong virtual asset-related licenses, including OSL, Guotai Junan International (01788.HK), Futu Holdings (FUTU.US) and TIGR.US (i.e. Tiger Securities). Among them, the Hong Kong-listed companies holding Hong Kong virtual asset licenses are mainly OSL and Guotai Junan International. In the US stock market, there are Futu Holdings and TIGR. The license obtained by Guotai Junan International this time has further increased the market's attention to related concept stocks.
According to the official announcement, Guotai Junan International has been approved to upgrade its "Type 1 Securities Trading License" to a license that can provide virtual asset trading services. The scope of services includes: providing direct virtual asset trading services (such as BTC, ETH and stablecoin USDT, etc.), providing opinions during the virtual asset trading service process, and issuing and distributing virtual asset-related products including over-the-counter derivatives, including over-the-counter derivatives, structured notes, tokenized securities, etc.
But in fact, since 2024, Guotai Junan International has introduced structured products based on virtual asset spot ETFs in the Hong Kong market, and has been licensed by the Hong Kong Securities and Futures Commission to carry out virtual asset trading platform introduction agent business. Until February 2025, the Hong Kong Securities and Futures Commission issued the "ASPI-Re" regulatory roadmap and clearly stated that the stablecoin management regulations will be implemented in August. Guotai Junan's move just hit the rhythm of policy implementation and was regarded as the actual implementation of the Hong Kong government's "virtual asset international hub" strategy.
As of June 25, Guotai Junan International's share price rose sharply after opening, closing up 198.4%, driving the Hong Kong Chinese Securities Index up 11.75%. In terms of A-shares, many securities stocks such as Tianfeng Securities hit the daily limit, Eastmoney rose more than 10%, and the Wind Securities Index closed up 5.52%.
Why the market reacted strongly — the licensing effect has symbolic significance
But it is worth noting that MetaEraCN tweeted that although Guotai Junan International became the first approved Chinese securities firm this time, it is not the only institution to deploy virtual asset licenses. According to industry insiders who are directly involved in the application for virtual asset licenses and system docking, several local Hong Kong securities firms, including Shengli Securities and Aide Securities, have successively completed the upgrade application for the No. 1 license. After the announcement of Guotai Junan International's license, the capital market reacted strongly, but Futu Holdings (FUTU.US) has continued to deploy in the virtual asset field since 2022, and its Hong Kong-listed subsidiary Futu Securities (Hong Kong) has also long been connected to the compliance platform and provides digital asset distribution, custody and other services.
According to BTCdayu's analysis of this difference, Guotai Junan International is a holding subsidiary of Guotai Junan Securities, and its largest shareholder is Guotai Haitong, which holds 74% of the shares. The actual controller of Guotai Haitong is the Shanghai State-owned Assets Supervision and Administration Commission. And it is reported that the Shanghai State-owned Assets Supervision and Administration Commission recently stated that it will invest 10 billion yuan in the next five years to support financial innovation and technological development. In this context, the market has given Guotai Junan International's virtual asset layout a "national strategic pilot" narrative, believing that it may enjoy first-mover advantages in terms of policies, funds, and resource acquisition. In contrast, Futu is an Internet brokerage, but it is controlled by non-state-owned capital, so the market association space is relatively limited, and its influence in China is relatively small. In addition, Guotai Junan International is the first Chinese-funded securities firm approved to provide full-chain virtual asset services (trading, consulting, and distribution). Under the regulatory structure, it has the symbolic significance of being the first "path pioneer", which has created a scarcity premium in the market. Therefore, although Futu has obtained similar qualifications through its subsidiaries as early as 2023, its identity is an Internet platform, and its positioning is different from that of traditional securities firms. In addition, the market has high expectations for its Web3 transformation, and its valuation is fully reflected, lacking additional positive catalysts. In contrast, Guotai Junan International's stock price consolidated at a low level in 2024, and the market did not fully take into account its progress in virtual assets. More importantly, Guotai Junan International (1788.HK) is a target of the Shanghai-Hong Kong Stock Connect, allowing A-share funds to invest in the stock through the northbound channel. Against the backdrop of the hot concepts of A-share securities firms, Web3, and stablecoins, A-share funds tend to allocate beneficiary targets through the Hong Kong Stock Connect, thereby exacerbating stock price fluctuations and fund chasing. In contrast, Futu Holdings is a U.S.-listed company (FUTU.US), which is not included in the Hong Kong Stock Connect list and cannot receive A-share funds. Even if its qualifications and business capabilities are not inferior, it is difficult for it to form a narrative hype of a "policy outlet."
Opportunities and risks faced by Chinese securities firms and exchanges
Judging from the layout of Guotai Junan International, its compliance path is to enter the virtual asset market by upgrading its license and relying on local regulatory channels as a traditional securities firm. However, according to EarningArtist, since most securities firms do not have their own exchanges, they mainly access trading services by setting up Omnibus Accounts on the licensed platform HashKey. Many securities firms (such as Futu, Tiger Securities, ZhongAn Bank, etc.) adopt similar models and strictly limit the scope of customers, such as requiring customers to have Hong Kong or overseas identities and not accepting transactions from mainland residents. Therefore, the seemingly hot regulatory breakthrough is actually only open to a small number of overseas investors. For most mainland residents, even if they pay high attention, it is difficult to really get in touch with this business. Even if you have the relevant identity, you still need to complete the compliant tax information declaration and meet the compliance requirements of overseas capital channels. The complexity of the operation is far from being easy for ordinary investors to complete. Mainland users are isolated outside the institutional threshold, while overseas users have long been accustomed to using international platforms such as Coinbase and Binance with richer liquidity and products. Under this dual limitation, there is still no clear path for Guotai Junan International to transform this new business into sustainable revenue. As for the fierce reaction of the capital market, it is more of a bet on future scenarios rather than a reflection of actual profitability. Through this cooperation, brokers provide customers with compliant market entry channels, exchanges provide trading and clearing support for brokers, and native exchanges such as HashKey can also absorb the traffic of large brokers by virtue of their own licensed platform status, forming a complementary relationship. Then the market bet will naturally radiate to the service providers and virtual asset exchange sectors related to it - according to Nansen data, HashKey platform currency HSK has risen by more than 50% in the past 24 hours, and OSL (00863.HK) rose 18% to HK$14.6 on June 25, hitting a one-year high.
The hidden dangers of Guotai Junan International's compliance path
In summary, the encryption business that made Guotai Junan International "out of the circle" this time is essentially based on the underlying service framework provided by HashKey. Whether it is transaction matching, asset custody, liquidation process, or on-chain asset management, it is essentially running on the "comprehensive account" system built by HashKey. Guotai Junan International plays more of a front-end channel and brand credit role in it. In other words, this is a "broker + exchange" cooperation model: brokers provide customer resources and licensed identities, and exchanges output technical capabilities and market depth. On the surface, this is a reasonable division of labor with complementary advantages.
However, according to haocrypto101's supplement, there is actually a potential problem - once the compliant exchange expands its proprietary business in the future, or encounters technical failures or compliance disputes, its highly bound cooperation structure with the brokerage firm will make it difficult to cut risk exposure and control it independently. The direct consequence of this business separation is the reduction of trust and the lack of product control ability, and HanshKey's current near-monopoly position is due to the fact that according to current regulations, the Hong Kong Securities and Futures Commission (SFC) requires brokerage firms holding Type 1 licenses to provide virtual asset trading services. Its liquidity provider must be a virtual asset trading platform (VATP) that has been issued a Type 7 license. For a long time, there were only two compliant platforms in the Hong Kong market that obtained the license, HashKey and OSL, available for docking. This also led to a large number of brokerage firms and financial institutions highly concentrated in choosing to access the services provided by these two platforms in actual business. The current regulatory system design in Hong Kong, while ensuring compliance, also suppresses the vitality of market competition to a certain extent. The number of compliant trading platforms that can be docked is limited, resulting in insufficient overall liquidity and a certain gap between the transaction price and the mainstream market in Europe and the United States. Therefore, many local investment institutions in Hong Kong choose to go directly to trading platforms in the United States and other places to purchase coins in order to obtain better prices and deeper liquidity.
At the same time, brokers are not satisfied with the limitations of the existing trading service ecosystem. They hope to obtain more competitive prices and service quality while ensuring compliance. Therefore, some institutions have chosen to apply for VATP licenses on their own and improve trading efficiency and customer experience by connecting to global liquidity providers, thereby achieving business autonomy and differentiation.
Finally, the Chinese brokerage Guotai Junan International was approved for a virtual asset trading service license in Hong Kong, which is an important step for the traditional brokerage business model to integrate with blockchain technology. This event shows that under a strict regulatory framework, Hong Kong is striving to build a digital asset financial ecosystem that is both compliant and dynamic. At the same time, this event also indirectly reflects that the market is no longer just focusing on Bitcoin or altcoins, but has begun to make arrangements around "compliant virtual assets + financial infrastructure", such as: stablecoins, tokenized bonds, chain-changing brokerages, etc. Hong Kong is trying to promote financial innovation through regulatory advantages and regain its previous voice as a financial center. The implementation of the Stablecoin Ordinance in May and the new license regulations in August are both further reserving regulatory space for offshore stablecoins. The release of Guotai Junan this time allows licensed financial institutions and exchanges to become a hotbed for incubating stablecoin distribution channels. Hong Kong's more than 1 trillion yuan of offshore RMB reserves can also provide a liquidity basis for stablecoins, providing a lot of opportunities for brokers to enter the market and join the distribution channels. However, the current regulatory caliber in the mainland is still very clear. Cryptocurrency assets such as Bitcoin are still not legal tender, and financial institutions and non-bank payment institutions are not allowed to provide services such as account opening, fund transfer, and clearing and settlement for virtual currency-related business activities. Therefore, for ordinary domestic investors who want to participate in the crypto asset services provided by Hong Kong, they must first legally own a Hong Kong account, and the source of funds and identity background must be able to meet the regulatory review standards for overseas compliant funds, because even if the service is provided by a compliant Hong Kong licensed institution. Whether it is Guotai Junan International, Futu, Tiger, etc., they all clearly prohibit investors with Chinese mainland identities from opening accounts to participate in digital asset transactions. However, referring to the evolution of the Shanghai-Hong Kong Stock Connect from institutions to individuals, in the future, qualified investors in the mainland (QDI, Hong Kong Stock Connect customers) may also be able to participate in virtual asset investment through regulatory approval.
