The stablecoin license trend hasn't cooled down yet when another license ignited Hong Kong's market—Guotai Junan International (01788.HK) became the first Hong Kong-based Chinese securities firm authorized to provide comprehensive virtual asset trading services. Clients can now trade cryptocurrencies (like Bitcoin BTC, Ethereum ETH), stablecoins (like Tether USDT), and other virtual assets directly on Guotai Junan International's platform.
On June 25, the news drove related securities firms' stock prices up by nearly 200%. By June 26, prices surged 90% before dropping 10%, settling at a 20% increase by 10:10 AM. While speculative sentiment dominates, the key question remains: What does this license mean for securities firms? What infrastructure upgrades are needed? How does this channel compare to overseas mainstream exchanges? And how will it interact with HKD stablecoins in the future?
The License Is for "Distribution"
Insiders directly involved in virtual asset license applications and system integrations revealed to First Financial that several local Hong Kong securities firms (e.g., Victory Securities, Eddid Securities) have already upgraded to Type 1 licenses, and Guotai Junan International isn’t the only Chinese-backed firm applying—more institutions may join later. Securities firms primarily offer "distribution"-based trading services rather than operating proprietary exchanges.
Specifically, the model involves setting up omnibus accounts within licensed exchanges. By connecting to trading systems, firms provide clients with channels to buy/sell mainstream compliant tokens (e.g., BTC, ETH), excluding high-risk altcoins or meme coins.
Currently, multiple local securities firms already offer similar distribution services, adhering to compliance requirements—KYC (Know Your Customer), suitability management, investor education—and barring mainland Chinese residents from trading.
Hong Kong’s virtual asset regulatory framework has unique characteristics. The Securities and Futures Commission (SFC) oversees virtual asset activities, while the Hong Kong Monetary Authority (HKMA) regulates payment-related areas (e.g., stablecoins, digital HKD). The SFC enforces a "same business, same risks, same rules" principle, supplementing traditional financial licenses with virtual asset-specific conditions and technical standards. Key licenses include:
- Upgraded Type 1 License: Virtual asset trading (distribution)—account opening/trading services for clients
- Upgraded Type 4 License: Virtual asset investment advisory—professional advice on digital assets
- Upgraded Type 7 License: Automated trading services—operating platforms alongside VASP licenses ("dual-license" system)
- Upgraded Type 9 License: Virtual asset management—overseeing funds with >10% virtual asset exposure
Safety and Compliance Are Key Advantages
This Chinese securities firm’s Type 1 license is distribution-only—it cannot build its own crypto exchange but must connect clients to existing platforms.
Compared to overseas exchanges like Binance or OKX, the primary advantages lie in safety and compliance.
For safety:
- Exchanges linked to Guotai Junan International are SFC-licensed and regulated
- Client assets are professionally custodied and insured against misuse
- Listed tokens undergo rigorous review, filtering out meme/altcoins to protect investors
For compliance:
- Licensed exchanges enforce strict AML (Anti-Money Laundering) and KYC procedures
- All trading complies with Hong Kong laws, ensuring asset legality
While investors can trade directly on crypto exchanges, securities firms offer a more beginner-friendly gateway.
Market Depth and Liquidity Remain Limited
However, safety/compliance come with trade-offs.
"Hong Kong’s compliant exchanges support limited tokens with shallow liquidity, lacking popular assets/derivatives, resulting in lower user activity vs. overseas platforms," said a manager at an overseas crypto exchange.
"Local crypto exchanges struggle to profit due to strict rules, fewer tokens, and exclusion of meme coins. Coinbase/Binance thrive by listing more tokens and charging hefty ICO fees."
In short, firms like Guotai Junan International will leverage local oversight/insurance to offer stable, compliant trading—but must improve token variety/liquidity.
Distribution Channels Will Shape Stablecoin Futures
How will Type 1 trading interact with upcoming HKD stablecoins?
Li Lianxuan, co-partner at Hashkey Tokenisation, noted that USDC’s success relied on Coinbase’s distribution network. For Hong Kong’s stablecoins, licensed financial institutions/exchanges will be critical distributors, alongside trading/RWA (Real-World Asset tokenization) use cases.
Cobo researchers added that Circle’s profit model—based on reserve asset net interest margins (NIM)—depends on distribution networks like Coinbase. This "new species" of stablecoin acts as financial infrastructure for the "internet currency layer," revalued by markets.
FAQs
Q: Can mainland Chinese residents trade via Guotai Junan International’s platform?
A: No—licensed Hong Kong securities firms prohibit mainland residents from trading virtual assets.
Q: How does SFC-regulated trading differ from overseas exchanges?
A: SFC platforms offer stricter compliance/safety but fewer tokens and lower liquidity vs. global exchanges.
Q: Will more Chinese securities firms obtain virtual asset licenses?
A: Yes—multiple firms are applying, with likely expansions in distribution services.
👉 Discover how Hong Kong is shaping the future of virtual asset trading