Asian Crypto Trading Anticipated to Surge with Hong Kong’s Stablecoin Bill
There has been a buzz among stock analysts about the potential surge in Asian crypto trading following the enactment of Hong Kong’s stablecoin bill on Friday. Stablecoins, digital assets that are pegged to national currencies, have recently gained a legal framework through Hong Kong’s new legislation, which is somewhat similar to the U.S. GENIUS Act.
Morgan Stanley and Citi Weigh In
Morgan Stanley analysts are predicting that the primary use of stablecoins will be in crypto trading. They believe this could draw more institutional investors to cryptocurrency. They recommend online brokerage Futu Holdings as the most promising investment, rating it as overweight with a target price of $164.25.
On the other hand, Citi analysts are placing their bets on Up Fintech, also known as Tiger Brokers. They upgraded its rating to buy from neutral, while maintaining a neutral rating on Futu due to its recent stock performance.
Online Brokerages in the Spotlight
Both Futu and Up Fintech, which were listed in the U.S. in 2019 ahead of Robinhood’s IPO, facilitate online stock and cryptocurrency trading. Originating from mainland China, these companies have shifted their focus towards Hong Kong and Singapore due to mainland China’s restrictions on capital and crypto trading.
Hong Kong and Singapore’s Crypto Market
According to Citi analysts, despite competition from unlicensed mainstream crypto exchanges, the crypto trading market in Hong Kong and Singapore is worth a whopping $640 billion. This positions Futu and Up Fintech to potentially achieve gains comparable to those of Robinhood.
Interestingly, Robinhood’s stock surge over recent months has been largely attributed to its crypto trading revenue, which doubled in the first quarter of the year. The company’s crypto revenue grew from 3% to 21% of its total revenue between 2020 and 2024.
Possible Business Opportunities
Part of Citi’s optimism about Up Fintech stems from potential business opportunities with Avenir Group, an investment firm connected to the founder of Bitcoin trading exchange Huobi. Avenir recently acquired a 5.9% stake in Up Fintech. Citi sees potential for Up Fintech to benefit if Avenir uses it as a designated crypto exchange for OTC trading or as a custodian bank.
A Look at the Bigger Picture
It is worth noting the distinction between the U.S. and Hong Kong crypto environments. Despite Beijing’s conservative stance in mainland China, Hong Kong, a special administrative region, has become the country’s testing ground for staying globally competitive in finance. Both Citi and Morgan Stanley anticipate that Hong Kong’s stablecoin support will initially focus on the use of Chinese yuan for international payments.
There’s no denying the region’s grand aspirations, as evident in the upcoming Bitcoin conference headlined by Eric Trump next month in Hong Kong. The stage is set for an exciting time in Asian crypto trading.
