Jessy, Jinse Finance
On June 26, Hong Kong released the "Hong Kong Digital Asset Development Policy Declaration 2.0", proposing the "LEAP" framework, dedicated to building Hong Kong into a global leading digital asset center.
Influenced by this, in the Hong Kong stock market, CICC International, as the first Hong Kong-based Chinese securities firm to provide comprehensive virtual asset trading services, saw its stock price rise from 1.24 Hong Kong dollars to a high of 7.02 Hong Kong dollars over two trading days on June 25 and 26, ultimately closing at 3.54 Hong Kong dollars. Driven by CICC International, the Hong Kong Chinese securities firm index surged 11.75% in a single day. Tianfeng Securities' subsidiary Tianfeng International obtained a virtual asset trading license, which also drove its A-share stock price to reach the daily limit, while Victory Securities, as the first broker to achieve cryptocurrency deposits and withdrawals, saw its stock price rise by 160% in a single day on the 26th. The capital market's fluctuation reflects expectations for brokers' business development in the virtual asset field.
The day after the declaration was issued, Hong Kong's first daily redeemable tokenized security was officially launched. It is reported that GF Securities (Hong Kong), as the first broker to issue a tokenized security in Hong Kong, has now launched its first daily redeemable tokenized security "GF Token", though this product is a privately issued tokenized money market fund targeting qualified institutional investors.
Trading virtual assets on brokerage platforms and tokenized securities may just be a starting point, with more traditional brokers potentially bringing innovations in the crypto field in the future.
New Opportunities for Brokers under the LEAP Framework
The "LEAP" framework proposed in "Declaration 2.0" outlines a clear development path for Hong Kong's digital asset market and opens unprecedented business growth space for traditional brokers. The declaration's impact on brokers primarily lies in providing clear policy endorsement, lowering compliance thresholds, and pointing out directions for business innovation.
Specifically, "L" (Legal) emphasizes improving the regulatory framework. For brokers, this means having clearer rules to follow when engaging in virtual asset trading, custody, issuance, and other businesses.
"E" (Ecosystem) aims to build an ecosystem integrating Web3 and traditional finance. Brokers, as crucial hubs in traditional financial markets, will be deeply integrated into this ecosystem. This is not just about adding a "crypto trading" section, but also means brokers can participate in a broader digital asset lifecycle, including but not limited to connecting traditional investors with digital assets, providing comprehensive wealth management based on tokenized assets, offering investment banking services for digital asset projects, and developing innovative financial products.
"A" (Assets) focuses on developing new asset types such as tokenization. The declaration views RWA tokenization as a key industry, with physical assets like precious metals, green energy, and warehouse receipts potentially being mapped on-chain in Hong Kong's future. In the RWA track, brokers can participate in issuance and management, such as acting as underwriters or providing related consulting services, which helps optimize brokers' revenue structure and open new profit growth points. GF Securities (Hong Kong)'s rapid launch of "GF Token" is evidence of this. In the future, we should see more tokenized bonds, fund shares, private equity, and even complex derivative structures led by brokers, greatly enriching their product lines and service ranges.
"P" (Partnership) emphasizes regional and international cooperation. Hong Kong brokers may seize this opportunity to establish partnerships with leading global digital asset service providers, technology providers, and projects seeking compliance channels, thereby enhancing their competitiveness and influence in the global digital asset market.
From Losses to New Opportunities in Crypto
In recent years, Hong Kong brokers' traditional brokerage and underwriting businesses have faced growth pressure due to global economic fluctuations, geopolitical factors, and declining Hong Kong stock market activity.
According to Hong Kong Exchanges and Clearing Limited's data, about 37 brokers ceased trading in 2024. Data from the past three years shows a yearly decrease in the number of Hong Kong brokers. With relatively low financial license application thresholds, the market is saturated with small and medium-sized brokers facing intense homogeneous competition. The weak performance of the Hong Kong stock market has further exacerbated brokers' operational pressures, with some small and medium-sized brokers facing significant survival challenges.
This "Hong Kong Digital Asset Development Policy Declaration 2.0" may bring new opportunities for brokers' development. The Hong Kong SFC website shows that as of June 26, 41 institutions have completed the upgrade of Type 1 license, preparing to upgrade their existing securities trading licenses to provide virtual asset trading services, with the majority being brokers, including Victory Securities, Tiger Securities, Futu Securities, Tianfeng International, and Haitong Securities Hong Kong.
Recently, 37 institutions have been approved for Type 4 license upgrade, which is virtual asset investment consulting - providing professional advice on digital assets, including CICC International Securities and Ping An Securities Hong Kong; 40 asset management institutions have been approved for Type 9 license upgrade, which is virtual asset management - managing funds with over 10% virtual asset allocation.
With the implementation of the "LEAP" framework and brokers' practices, the Hong Kong market is expected to welcome a wave of financial innovation led by brokers, with "GF Token" possibly just the beginning. More types of tokenized bonds, funds, REITs, and even IPOs may emerge. Brokers will also utilize their structured capabilities and distribution networks to become core issuers and market makers.
Looking ahead, brokers may develop more complex structured yield certificates, derivatives linked to digital asset performance, and automated investment strategy products by combining smart contracts. Seamless exchanges and trading experiences between "fiat-stablecoin-cryptocurrency-traditional securities" will be realized. Brokers can provide leverage services like financing and margin trading based on customers' digital assets as collateral, integrating comprehensive wealth management and asset allocation solutions for digital assets.
However, the "spring" does not arrive overnight. The declaration provides fertile soil and a clear direction, but true harvest requires brokers to continuously cultivate in technological innovation, compliance risk control, customer education, and product design. Challenges and fierce competition persist. For brokers, the competition in the crypto asset track is not just among themselves but also with compliant trading platforms.
For the crypto industry, brokers' active entry undoubtedly builds a bridge between crypto and traditional finance, making fund flows between traditional financial products and virtual currencies smoother.
