As Chinese authorities take tough measures by introducing a ban on crypto trading, local brokerage firms see a massive opportunity in the global crypto trading market. China’s two biggest online brokerage firms – Beijing-based Tiger Brokers and Shenzhen-based Futu – are looking ahead to set up a footprint in the global crypto trading marketing citing big opportunity.
As reported by the South China Morning Post (SCMP), these two players will be competing straight away with global players like Robinhood and eToro. Both – Tiger Brokers and Futu unveiled this plan last month during the company’s earnings call. These companies have also applied for local licenses in Singapore and the U.S.
This move comes amid the strong performance of the crypto market over the last few months. Besides, rising interest and participation by retail and institutional players provide these brokerages a better opportunity in the market. Local Chinese exchanges have been having a very tough time while dealing with the current regulatory onslaught.
As CoinGape reported, many exchanges have suspended contract trading. As a result of this, traders have moved to OTC desks to execute their crypto futures trades. The management teams at Tiger Brokers and Futu have confirmed that its crypto trading service will only target customers outside China. Wu Tianhua, chief executive of Tiger Brokers, said:
“We notice cryptocurrencies such as bitcoin have become more acceptable by mainstream investors since last year and are emerging as an asset class. Tiger’s mission is to make investing more efficient and enjoyable for investors”.
Competing With Global Players
Players like Robinhood and eToro have a strong footprint in the global crypto trading market. Launching its crypto trading services in 2018, Robinhood has been the go-to app for users for its low brokerage fees. the application has added a massive 3 million customers per month to its crypto business. Similarly, Israel-based eToro has a strong presence in the global crypto trading market.
But Chinese online brokerages are seeing strong market traction. The players have gained 100,000 paying clients in Singapore in just under 3 months. Futu noted that nearly one-fourth of the new paying client in Q1 2021 came from the U.S. and Singapore markets. Robin Li Xu, senior vice-president, said:
“We’re in the process of applying for digital currency-related licences in the US, Singapore and Hong Kong”.
Besides, Robinhood and eToro, the two Chinese brokerages will also have to compete with some big players like Coinbase and Interactive Brokers. even traditional banking players like Goldman Sachs are working to set up a dedicated crypto trading desk for their institutional players.