Chinese Brokerages Venture Into Offshore Crypto Trading

Two of China’s biggest online stock brokerages, Beijing-based Tiger Brokers and Shenzhen-based Futu, have decided to join the tide of online stock brokerages trading cryptocurrency that has taken the investing world by storm.

The two companies are currently in the process of obtaining crypto-trading licenses in the US and Singapore and are planning to set foot in the global crypto-trading market. Following a ban on crypto trading and other harsh measures by the Chinese authorities, Chinese companies are relocating outside China to compete with western peers like Robinhood and eToro.

Both companies revealed their plans in May’s first-quarter earnings call. The news came amidst the Chinese government’s latest crackdown on cryptocurrency trading, regulatory onslaught, and extreme cryptocurrency price swings.

“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, CEO of Tiger Brokers. 

Plans of expanding into cryptocurrency trading came as no surprise, as both Tiger Brokers and Futu have seen strong market traction. Tencent-backed Futu pointed out that almost one-fourth of its new clients in the first quarter of 2021 came from the US and Singapore markets. With 790,000 users, its first-quarter net profit skyrocketed by more than six times compared to 2020, to $149.5 million.

Tiger Brokers, backed by smart tech giant Xiaomi, reported a net profit of $21.1 million in Q1 2021 - a considerable leap from a $200,000 loss in the same period in 2020. With 376,000 users, Tiger Brokers has joined Futu in the hunt for paying clients in Singapore and the US.

They’ll have to fight hard to become and stay competitive on the market, though, with big names such as Robinhood, eToro, Coinbase, and Interactive Brokers preying on new paying users.