Tiger Brokers, Futu plan to launch cryptocurrency trading services outside China, taking on Robinhood, eToro

·3-min read

Chinese online brokerages Tiger Brokers and Futu are planning to expand into cryptocurrency trading, joining western peers such as Robinhood in the US, and Israel’s eToro in attempts to turn volatile digital coins into mainstream assets.

The Nasdaq-listed brokers have unveiled their new business plans during first-quarter earnings calls in the past month, competing and segregating for a growing pool of young and mobile traders outside mainland China.

The move has come amid China’s crackdown on onshore trading and mining of the digital currencies because of financial and environmental risks. Cryptocurrencies, which saw extreme price swings in May, have divided Wall Street, with Goldman setting up a dedicated trading desk, JPMorgan Chase reportedly offering a bitcoin fund for wealthy clients and Bank of America so far keeping its distance.

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Beijing’s war on cryptocurrency trading and mining has sent bitcoin plunging 40 per cent over the past month. The management teams at both Futu and Tiger Brokers were quick to point out that the new bitcoin trading services would only target customers that are not based in mainland China.

“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,” said Wu Tianhua, chief executive of Tiger Brokers, during the call held last Tuesday.

Wu said Beijing-based Tiger Brokers, which is backed by smartphone giant Xiaomi, is “not going to offer such a service to Chinese nationals”, adding that it is in the process of applying for the “relevant licences” governing crypto trading, without specifying from which regulators.

Tiger Brokers reported first-quarter net profit of US$21.1 million, compared to a net loss of about US$200,000 during the same period a year ago. It offers trading services for stocks listed on the US, Hong Kong, Australia and Singapore stock exchanges. It has 376,000 customers with deposits ready to trade.

Tencent-backed Futu, which has made a big push into the Hong Kong retail market in recent years, also said it would expand into digital currency trading in the second half of this year.

“We’re in the process of applying for digital currency-related licences in the US, Singapore and Hong Kong,” said Robin Li Xu, senior vice-president, during Futu’s earning conference call held on May 19.

Founded in 2012, chairman Leaf Li Hua has envisioned that Futu would grow into “China’s Charles Schwab”. But the Shenzhen-based online brokerage has since taken a wider path of diversification.

With 790,000 paying customers, its first-quarter net profit rose by more than six times year-on-year to US$149.5 million. In recent years Futu has been focusing on diversifying its business from just stock trading and initial public offerings.

It has won a licence from the regulator of Hong Kong’s Mandatory Provident Fund to sell and market retirement schemes to its customers.

Adding cryptocurrency trading means that it will have to get a virtual asset service provider licence from the city’s securities regulator.

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