The global financial landscape is undergoing a digital transformation, and traditional financial institutions are increasingly positioning themselves at the forefront of this evolution. Among the most notable developments is the entry of Chinese brokerages into the virtual asset trading arena—particularly through their international subsidiaries in Hong Kong. With regulatory clarity improving and infrastructure maturing, firms like Guotai Junan International are leading the charge, signaling a pivotal shift in how Asian financial players engage with digital assets.
This strategic pivot isn’t just about offering crypto trading—it reflects a broader ambition to build cross-border digital financial infrastructure, diversify revenue streams, and capture new investor demand. As Hong Kong solidifies its role as a global hub for virtual assets, the move by mainland-backed brokerages marks a significant milestone in the convergence of traditional finance and blockchain-based markets.
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The Significance of “Type 1 License Upgrade” in Hong Kong
In February 2025, the Securities and Futures Commission (SFC) of Hong Kong unveiled its "A-S-P-I-Re" roadmap—short for Access, Safeguard, Product, Infrastructure, and Reach—to guide the development of a robust and compliant virtual asset ecosystem. This framework has provided much-needed clarity for financial institutions navigating the complex intersection of innovation and regulation.
Under this evolving regulatory environment, Guotai Junan International Holdings Limited recently made history by becoming the first mainland-backed brokerage in Hong Kong to successfully upgrade its existing Type 1 (Securities Trading) license to include full virtual asset trading services. Announced on June 24, the upgraded license now permits the firm to:
- Facilitate direct trading of cryptocurrencies and stablecoins
- Provide investment advice related to virtual asset transactions
- Issue and distribute virtual asset-linked products, including over-the-counter (OTC) derivatives
This so-called “Type 1 license upgrade” allows clients to access both traditional securities and digital assets through a single, regulated platform—a significant step toward integrated wealth management.
According to Xu Kang, Chief Financial Industry Analyst at Huachuang Securities, “Guotai Junan International’s early involvement and faster-than-expected approval set a precedent. We expect other Chinese brokerages with Hong Kong subsidiaries—especially those with strong client bases—to follow suit.”
Industry-Wide Implications and Competitive Dynamics
The approval sends a powerful signal across the financial sector: virtual assets are no longer niche or speculative—they are becoming part of mainstream financial services. As more institutions seek similar upgrades, competition is shifting from basic brokerage functions to higher-value capabilities.
As Tian Liang, Chief Analyst for Financial Industries at CITIC Securities, observes: “Hong Kong’s strategic commitment to virtual assets, combined with its mature financial infrastructure and international regulatory standards, positions it uniquely in the global market. With support from the Greater Bay Area’s innovation ecosystem, Hong Kong is accelerating its journey to become a leading global hub for digital finance.”
Currently, there are 11 licensed virtual asset trading platforms registered with the SFC, ranging from fintech startups to established financial institutions. Guotai Junan International’s move sets a benchmark for others, particularly peers like China International Capital Corporation (CICC) and Haitong International.
Suntin Sun, Non-Bank Financials Lead at Dongwu Securities, highlights two core capabilities that will define future success:
- Clearing Hub Functionality: Enabling efficient settlement and custody across multiple digital asset classes
- Securitization Engine: Transforming real-world assets (RWA) into tokenized securities
These dual pillars not only enhance fee-based income but also open new avenues for balance sheet growth via stablecoin reserve asset allocation—blending light-capital advisory models with capital-intensive operations.
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Core Keywords Integration
Key themes emerging from this transformation include virtual asset trading, digital finance infrastructure, Hong Kong SFC regulation, Type 1 license upgrade, stablecoin integration, tokenized assets, brokerage innovation, and cross-border digital investment. These terms reflect both regulatory progress and market evolution, capturing search intent around compliance, investment access, and institutional adoption.
By embedding these keywords naturally throughout client communications, product descriptions, and platform enhancements, firms can improve visibility while maintaining credibility. For example, positioning services around “regulated virtual asset trading in Hong Kong” aligns with growing investor demand for secure, transparent access to digital markets.
Risk Management Challenges in a High-Volatility Environment
Despite the opportunities, integrating virtual assets into traditional brokerage operations introduces new risks. Digital assets are known for their price volatility, cybersecurity threats, and technological complexity—challenges that require robust risk control frameworks.
Zheng Lei, Chief Economist at Samoyed Cloud Technology Group, notes: “While Hong Kong applies a principle of ‘same business, same regulation,’ which allows traditional risk management models to be adapted for areas like virtual asset custody, entirely new domains—such as stablecoins and real-world asset tokenization—require substantial IT investment and system upgrades.”
Moreover, current market depth and transaction volumes may not yet justify large-scale capital outlays. Some firms have obtained licenses but remain cautious about rolling out full product suites. The return on investment remains uncertain in the short term.
Still, early movers gain strategic advantages: brand positioning, client trust, regulatory familiarity, and operational experience—all critical in an emerging market where first-mover insights can shape long-term dominance.
Frequently Asked Questions (FAQ)
Q: What does a "Type 1 license upgrade" allow brokerages to do?
A: It expands a brokerage’s authorization from traditional securities trading to include virtual asset trading, advisory services on digital assets, and distribution of related financial products such as OTC derivatives.
Q: Why is Hong Kong a key market for virtual asset development?
A: Hong Kong combines a well-developed financial infrastructure with a forward-looking regulatory framework under the SFC’s A-S-P-I-Re roadmap. Its status as an international financial center makes it ideal for bridging global digital asset markets with mainland China’s capital.
Q: Are Chinese brokerages directly offering crypto trading on the mainland?
A: No. These services are being rolled out through Hong Kong-based subsidiaries under local regulations. Mainland China maintains strict controls on cryptocurrency transactions.
Q: How do virtual assets impact a brokerage’s business model?
A: They enable higher-margin services like advisory and structured product issuance, support balance sheet expansion via reserve assets (e.g., stablecoins), and attract younger, tech-savvy investors.
Q: Is client fund security guaranteed in virtual asset trading?
A: Licensed platforms must comply with stringent custody and capital adequacy rules set by the SFC. However, investors should still conduct due diligence and understand the inherent risks of digital assets.
Q: Will more Chinese brokerages enter this space?
A: Yes. Analysts expect major players with international arms—such as CICC, Haitong International, and CITIC Securities—to pursue similar license upgrades in the coming years.
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Conclusion: A New Chapter in Institutional Digital Finance
Guotai Junan International’s milestone represents more than a single firm’s achievement—it symbolizes a broader transformation within China’s financial industry. As regulatory frameworks stabilize and technology matures, the integration of virtual assets into mainstream finance becomes not just feasible but inevitable.
For investors, this means greater access to diversified digital portfolios through trusted intermediaries. For brokerages, it opens doors to innovation, international expansion, and sustainable revenue growth. And for Hong Kong, it reinforces its ambition to be Asia’s premier gateway for digital finance.
The race is just beginning—and those building the infrastructure today will shape tomorrow’s financial ecosystem.