The financial landscape in Hong Kong is undergoing a transformative shift as traditional securities firms embrace virtual assets through regulatory upgrades. With the Hong Kong Securities and Futures Commission (SFC) revealing that 40 financial institutions have successfully enhanced their Type 1 (Securities Dealing) licenses to include virtual asset trading services, a new era of integrated finance is emerging. This move marks a pivotal moment in the evolution of brokerages—from conventional players to digital asset innovators.
Among the early adopters, CITIC Guoan International made headlines on June 24 by becoming the first mainland-backed securities firm in Hong Kong to obtain a comprehensive license covering virtual asset trading and advisory services. This upgrade positions it as a full-service digital asset hub, aligning with Hong Kong’s strategic goal of becoming a global virtual asset center.
👉 Discover how leading brokers are unlocking new revenue streams with crypto integration.
The Rise of Institutional Virtual Asset Adoption
The momentum began earlier with TF International, a subsidiary of TF Securities, which became the first state-affiliated broker in Hong Kong to receive SFC approval for virtual asset services back in October 2024. Since then, major players like CITIC Securities, Huatai Securities, and China Merchants Securities have all signaled active progress toward similar upgrades.
This wave of institutional adoption isn't just about staying competitive—it's redefining what a modern investment firm can be. By integrating virtual assets into their core offerings, these firms are not only expanding their service portfolios but also reshaping their valuation models, opening doors to high-margin revenue streams and next-generation financial products.
Key Players and Their Progress
- CITIC Securities: Actively building infrastructure for virtual asset services
- Huatai Securities: Strategic focus on license enhancement; application underway
- China Merchants Securities: Preparing for virtual asset trading operations; process advancing
- Guangfa Securities: Launched its first tokenized security product
- Haifu Securities (under East Money), Futu Securities (Hong Kong), Interactive Brokers, and ZhongAn Bank are also part of this growing ecosystem
These developments reflect a broader trend: traditional finance is no longer viewing digital assets as speculative outliers but as integral components of future wealth management and capital markets.
Regulatory Framework: A Dual-Layered Approach
Hong Kong’s regulatory environment stands out for its clarity and forward-thinking design. While the SFC oversees virtual asset trading, custody, and investment advice under enhanced licensing regimes, the Hong Kong Monetary Authority (HKMA) manages payment-related aspects such as stablecoins and the digital Hong Kong dollar (e-HKD).
This dual oversight ensures robust consumer protection while fostering innovation. The SFC applies its “same business, same risk, same regulation” principle, meaning that firms offering virtual asset services must meet stringent technical, compliance, and operational standards—just as they would for traditional financial products.
Core License Types Enabling Innovation
- Type 1 (Enhanced): Permits virtual asset trading and distribution via integrated accounts
- Type 4 (Enhanced): Allows provision of investment advice on crypto assets
- Type 7 (Enhanced): Enables automated trading systems; often paired with a VASP (Virtual Asset Service Provider) license for platform operation
- Type 9 (Enhanced): Authorizes management of funds with more than 10% exposure to virtual assets
This structured yet flexible framework empowers brokers to build end-to-end digital asset solutions—from trading and custody to fund management and advisory.
Transforming Brokerage Valuation: Three Key Shifts
1. Fundamental Revaluation of Business Models
The acquisition of virtual asset licenses is not merely an add-on—it represents a strategic metamorphosis. As highlighted by Dongwu Securities, CITIC Guoan International now offers a complete value chain: trading, custody, advisory, issuance, and derivatives. This transformation shifts its market identity from a traditional broker to a digital asset nexus, significantly enhancing its enterprise value.
A real-world parallel can be found in Robinhood, the U.S.-based fintech platform. Since launching crypto trading in 2018, Robinhood has seen crypto contribute over 43% of its transaction revenue in Q1 2025. Its acquisition of European exchange Bitstamp for $200 million underscores its long-term commitment. Over two years, Robinhood’s market cap surged nearly sixfold, surpassing even Coinbase—a testament to how deeply crypto integration can amplify valuations.
2. High-Margin Revenue Opportunities
Virtual asset services offer significantly higher margins than traditional brokerage activities. According to Shenwan Hongyuan Research, key growth drivers include:
- Higher trading commissions on crypto and stablecoin transactions
- Cross-border settlement revenue through stablecoin clearing (offering faster, cheaper alternatives to SWIFT)
- Structured product design fees from crypto-linked derivatives
Moreover, brokers are expanding into multiple business lines:
- Brokerage: Integrating crypto trading into existing platforms or partnering with licensed exchanges
- Asset Management: Using upgraded Type 9 licenses to launch crypto funds or hybrid portfolios
- Investment Banking: Supporting IPOs and M&A deals for blockchain startups seeking mainstream market access
- Advisory Services: Providing institutional and retail clients with tailored crypto investment strategies
- Private Equity: Investing directly in key ecosystem players like exchanges and stablecoin issuers
👉 See how brokers are turning crypto into a profit powerhouse.
3. Pioneering Next-Gen Financial Models
With full licensing, brokers gain first-mover advantages in cutting-edge domains:
- Stablecoin Issuance: Potential to issue regulated digital currencies for payments and settlements
- RWA (Real World Asset) Tokenization: Converting physical assets—real estate, bonds, commodities—into blockchain-based tokens for fractional ownership and liquidity
As TF Securities noted, RWA unlocks new financing mechanisms and redefines growth logic for traditional finance. Imagine a real estate portfolio tokenized on-chain, allowing global investors to buy shares with digital wallets—this is the future being built today.
Emerging Business Models in Digital Finance
Several innovative frameworks are already taking shape:
- Crypto Custody Services: Secure storage solutions for institutional investors
- Derivatives Trading Platforms: Offering futures, options, and leveraged products on Bitcoin and Ethereum
- RWA-Crypto Integration: Linking tokenized real-world assets with decentralized finance protocols
- Crypto-Collateralized Lending: Using digital assets as collateral to borrow fiat for traditional investments
- Yield Curve Analysis: Developing structured products based on crypto market interest rates
These models represent a fundamental departure from legacy systems—more agile, global, and efficient.
👉 Explore how tokenization is revolutionizing asset management.
Frequently Asked Questions (FAQ)
Q: What does it mean for a broker to upgrade its Type 1 license?
A: It allows the firm to legally offer virtual asset trading services alongside traditional securities through integrated accounts, subject to SFC’s enhanced compliance requirements.
Q: Why are stablecoins important for brokers?
A: Stablecoins enable fast, low-cost cross-border settlements and serve as foundational assets in DeFi and tokenized finance—opening new revenue pools in clearing and issuance.
Q: How does RWA tokenization benefit investors?
A: It increases liquidity, lowers entry barriers through fractional ownership, and enables automated compliance and dividend distribution via smart contracts.
Q: Can traditional brokers manage crypto funds?
A: Yes—under an upgraded Type 9 license, brokers can manage portfolios where virtual assets exceed 10% of total holdings.
Q: Is Hong Kong the only market allowing such integration?
A: While other jurisdictions are exploring similar models, Hong Kong’s clear regulatory roadmap and dual-authority framework make it a global leader in institutional crypto adoption.
Q: What risks do brokers face when entering crypto?
A: Key challenges include cybersecurity threats, market volatility, regulatory changes, and operational complexity—but these are mitigated through robust governance and technology infrastructure.
Core Keywords: virtual asset license, broker valuation, RWA tokenization, stablecoin, crypto trading, Hong Kong SFC, Type 1 license, digital asset services