China’s Robinhood rivals join the cryptocurrency craze

In this photo illustration, a Bitcoin logo is shown on a smartphone with stock market percentages in the background.

Omar Marques | Images SOPA | LightRocket | fake images

BEIJING – Two of China’s rivals of stock trading app Robinhood are looking to cryptocurrencies as a way to compete abroad.

The companies, Futu and Tiger Brokers, revealed during earnings calls last month that they are applying for licenses in Singapore and the US that would allow local clients to trade digital currencies.

The move comes as cryptocurrencies like bitcoin have returned to the limelight in recent months, while Chinese regulators have stepped up their efforts to limit speculation in the market. In recent weeks, authorities have issued new warnings against digital currency trading and a crackdown on bitcoin mining, a power-intensive computing process that allows participants to earn bitcoins.

But in the world of financial trading, the demand for cryptocurrencies is high as the price of bitcoin surged to record highs above $ 60,000, before falling sharply to around $ 35,000.

Robinhood, which launched bitcoin and ethereum trading in the US in early 2018, has added 3 million customers a month this year for its crypto business. In April, the US-based cryptocurrency trading site Coinbase debuted on the Nasdaq.

“We hear a lot of interest from our users around the world in terms of crypto. We’ve heard that, ”Arthur Chen, Futu’s chief financial officer, told CNBC last week. He said the company hopes to offer cryptocurrency-related products as early as the end of this year.

Both Futu and Tiger Brokers were primarily started from Chinese employees of major tech companies such as Alibaba and Baidu. Since these companies are listed in the US, that piqued their employees’ interest in trading stocks abroad.

However, both companies are increasingly focusing on markets outside of mainland China. In addition to essentially banning yuan-bitcoin transactions, Beijing strictly controls capital flows outside the mainland.

Futu has gained 100,000 paying customers in Singapore in less than three months since its launch there in early March, Chen said. He said that about a quarter of the new paying customers in the first quarter come from Singapore and the US.

In the international retail market, the two companies face competition not only from Robinhood, but also from traditional players such as Interactive Brokers. Both Futu and Tiger seek to attract customers with an in-app social network where users can exchange business ideas and watch investor education courses.

At the end of March, Futu said it had 789,652 clients with assets in its business accounts, more than three times more than a year ago.

Tiger said the number of deposit customers more than doubled in the first quarter from a year earlier to 376,000.

Cooling of interest in IPOs

Clients are very interested in cryptocurrencies and Coinbase’s stock listing attracted new users, Tiger Brokers CEO Tianhua Wu told CNBC last week.

But he said general user interest in initial public offerings has cooled from last year. While the IPO buzz could have generated orders worth a billion dollars or more around one listing, now the offers are attracting much less in terms of orders, Wu said.

Last week, both Futu and Tiger Brokers were added to the MSCI stock indices, which are followed by trillions of dollars of global investment.

– CNBC’s Kate Rooney contributed to this report.

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