The Hong Kong financial landscape is undergoing a transformative shift as traditional brokerage firms embrace the digital asset revolution. On June 24, Cathay Securities International (HK01788), the international arm of mainland China’s Cathay Securities, announced it has received formal approval from the Securities and Futures Commission (SFC) of Hong Kong to upgrade its existing securities trading license. This enhancement now permits the firm to offer virtual asset trading services—including direct access to cryptocurrencies like Bitcoin and Ethereum, as well as stablecoins such as Tether—and provide investment advice related to these digital assets.
This milestone positions Cathay Securities International as the first Chinese-funded securities firm in Hong Kong to deliver a full suite of virtual asset services: trading, advisory, issuance, and distribution of virtual asset-related products, including over-the-counter derivatives.
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A Strategic Move Years in the Making
While the official license upgrade was granted in mid-2025, Cathay Securities International’s journey into digital finance began much earlier. In 2024, the company launched structured products based on virtual asset spot ETFs, becoming one of the first in Hong Kong to do so. That same year, it received SFC approval to act as an introducing agent for virtual asset trading platforms.
By early 2025, the firm had further expanded its capabilities by securing regulatory greenlight to distribute tokenized securities and began piloting digital bond issuance—clear signals of a long-term strategy aimed at bridging traditional capital markets with decentralized finance.
This phased, compliance-first approach reflects a broader trend among global financial institutions: rather than rushing into crypto speculation, they are methodically building regulated infrastructure that aligns with investor protection and anti-money laundering (AML) standards.
The Regulatory Framework Behind the Shift
In Hong Kong, any entity offering or promoting virtual asset trading must comply with strict licensing requirements under the Securities and Futures Ordinance. For platforms dealing with security tokens, a Type 1 (Dealing in Securities) and Type 7 (Automated Trading Services) license is mandatory.
Following the passage of the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022, centralized virtual asset exchanges providing services for non-security tokens have been required since June 1, 2023, to obtain a Virtual Asset Service Provider (VASP) license—or qualify under deemed licensing provisions.
Cathay Securities International’s upgraded license falls within this framework, specifically enabling “virtual asset trading services through integrated account arrangements,” a classification visible on the SFC’s public register under “Virtual Asset Related Activities.”
Other notable financial players that have secured similar approvals include Futu Holdings (FUTU.US), ZhongAn Online (HK06060), and Interactive Brokers (IBKR.US), signaling growing institutional confidence in Hong Kong’s regulated crypto ecosystem.
Market Reaction and Investor Sentiment
News of the license upgrade triggered a dramatic market response. On June 25, shares of Cathay Securities International surged over 80% intraday, closing up 198.39%—a clear vote of confidence from investors anticipating new revenue streams and strategic positioning. While the stock pulled back slightly the next day with a 4.32% decline, the long-term implications remain bullish.
Futu Securities Executive Director Michael Tse highlighted rising demand: “Since launching Bitcoin and Ethereum trading pairs against HKD and USD in August 2024, we’ve seen continuous growth in user engagement. Client discussions around digital assets are more active than ever.”
He added that demand is bidirectional: some traditional investors are exploring crypto exposure, while crypto-native users are seeking diversified portfolios through conventional financial instruments.
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Industry-Wide Implications: Reshaping Brokerage Models
The approval marks more than a win for one brokerage—it could catalyze a structural shift across the entire securities industry.
According to analysts at Huachuang Securities, Cathay’s successful “Type 1 license upgrade” demonstrates a viable path for other mainland-backed brokers with Hong Kong subsidiaries. Firms like CITIC Securities, CICC, and China Merchants Securities may now accelerate their own applications, especially those already involved in Bitcoin and Ethereum spot ETF distribution.
Why This Matters for Brokers:
- New Revenue Streams: Crypto trading commissions are significantly higher than traditional equity brokerage fees.
- Cross-Border Settlement Innovation: Stablecoin-based clearing offers faster, cheaper alternatives to SWIFT, opening up fee-sharing opportunities.
- Tokenization Leadership: Early movers gain advantage in issuing tokenized real-world assets (RWA), such as bonds, funds, and private equity.
As noted by Dongwu Securities, this evolution transforms brokers from mere transaction facilitators into digital financial infrastructure providers—a dual-pillar model built on:
- Clearing Hubs: Using stablecoins for efficient cross-border payments.
- Securitization Engines: Driving issuance and management of programmable financial assets.
This shift not only improves income diversity but also creates balance sheet expansion opportunities through stablecoin reserve holdings.
FAQs: Understanding the Digital Transformation
Q: What does a VASP license allow a broker to do?
A: A Virtual Asset Service Provider license enables firms to legally offer crypto trading, custody, advisory, and product distribution services under Hong Kong’s regulatory framework.
Q: Can all Hong Kong brokers apply for this upgrade?
A: Technically yes, but only those meeting stringent capital adequacy, risk management, and compliance requirements set by the SFC are likely to succeed.
Q: How is this different from a crypto exchange license?
A: It integrates virtual asset services directly into a traditional brokerage platform, allowing clients to manage both stocks and crypto in one account—unlike standalone exchanges.
Q: Are stablecoins safe under this system?
A: Regulated brokers must adhere to strict custodial rules and AML checks, making them far safer than unregulated platforms.
Q: Will this lead to mass adoption of crypto in portfolios?
A: Gradually. With trusted intermediaries offering compliant access, more conservative investors may begin allocating small portions of their portfolios to digital assets.
Q: What role do ETFs play in this transition?
A: Spot Bitcoin and Ethereum ETFs serve as regulated entry points for institutional investors, reducing volatility risks while offering exposure to price appreciation.
The Broader Ecosystem Impact
The ripple effects extend beyond brokerages. As virtual assets become institutionalized:
- Fintech firms see rising demand for blockchain infrastructure, smart contract auditing, and on-chain monitoring tools.
- Payment providers can integrate stablecoin rails for near-instant cross-border settlements.
- Asset managers are launching tokenized money market funds, bond ETFs, and even fractionalized real estate investment trusts (REITs).
Together, these developments are forming a cohesive digital asset ecosystem—one where innovation meets regulation, and where finance becomes more programmable, transparent, and globally interconnected.
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Final Thoughts
Cathay Securities International’s license upgrade isn’t just a corporate milestone—it’s a bellwether for the future of finance in Asia. By merging traditional brokerage strength with cutting-edge digital asset capabilities, it sets a precedent others will follow.
For investors, regulators, and financial institutions alike, the message is clear: the era of institutional-grade digital finance has arrived. And Hong Kong is emerging as a key battleground for shaping its rules and rewards.
Keywords: virtual asset trading license, Cathay Securities International, VASP license Hong Kong, cryptocurrency brokerage services, tokenized securities, Bitcoin ETF Hong Kong, digital asset ecosystem, regulated crypto trading