Futu Group's Zeng Yuchao discusses the new landscape and development strategy of virtual asset regulation.

Source: Futu Holdings

Zeng Yuchao, Managing Director of Futu Group, recently accepted an interview on topics of great interest in the market, providing an in-depth interpretation of the group's wealth management and Web3 business layout, sharing his views and analysis on three key issues.

1. Comments on the recent trend of several domestic Chinese securities firms receiving upgraded Class One licenses, and the related stocks being highly sought after in the market.
2. The current status of licenses related to virtual assets, what is VATP, and what is the upgrade of license number 1.
3. The licensing situation of Futu and how to layout virtual assets.

Q1: Recently, several Chinese-funded securities firms have successfully upgraded to a first-class license, and the market reaction has been very enthusiastic. Coupled with the bull market in Hong Kong stocks and the surge in stablecoins, related stocks have been rising all the way. How do you view this investment trend?

Recently, the market's attention to digital assets has significantly increased, indeed driving the price fluctuations of related concept stocks. We believe this phenomenon reflects the market's high expectations for the future development of Web 3.0, blockchain technology, and virtual assets, as well as investors' responses to policy signals and industry trends.

In the short term, some listed companies have experienced stock price fluctuations due to the announcement of their involvement in virtual asset-related businesses, which is more a result of sentiment-driven and speculative trading as the market seeks "new stories" and "new growth." However, in the long run, only companies that truly possess technical capability, compliance qualifications, and sustainable operational ability are likely to establish a moat in the digital asset field, achieve long-term sustainable development, and obtain stable value returns.

We believe that as the regulatory frameworks in markets such as Hong Kong become clearer, the industry will gradually transition from being "concept-driven" to "capability-driven" and "value realization." Investors will also increasingly focus on the actual performance of companies in areas such as technology implementation, user growth, and compliance building, rather than merely speculating based on concepts.

Q2: Reports indicate that securities firms are clustering to upgrade their licenses to seize opportunities in the virtual asset market. So, what is the current layout and licensing situation of Hong Kong's securities firms in the virtual asset space?

The upgrade of License Type 1 by the Hong Kong Securities and Futures Commission mainly targets licensed brokers in Hong Kong, aiming to further enhance their capability to provide virtual asset trading services on top of the existing services that offer trading in traditional financial products such as securities and funds. Brokers upgraded under License Type 1 do not include the authority to "custody" clients' virtual assets. Clients' virtual assets must be held on custodial platforms recognized by the Hong Kong Securities and Futures Commission, including those with a Virtual Asset Trading Platform License (VATP) issued by the HK SFC.

It is important to note that compared to the upgrade of the first-class license for brokers, institutions holding a Virtual Asset Trading Platform license (VATP) have a more comprehensive service capability, including virtual asset custody, trading matching, and the exchange between fiat currency and virtual currency. Brokers that obtain the first-class license upgrade must connect to an already licensed VATP platform through an "Omnibus Account" arrangement to provide virtual asset trading services for clients. However, brokers with the upgraded first-class license can offer "one-stop" trading, allowing clients to invest in a variety of assets including Hong Kong, US, and Japanese stocks, cryptocurrencies, options, ETFs, cash management (money market funds), bonds, and more, all within one app. In contrast, VATP platforms can only provide the underlying trading matching and custody capabilities for virtual currencies.

Q3: What is the licensing situation of Futu? How is Futu positioning itself and embracing Web3.0?

Futu has made positive progress in the compliance operation of virtual licenses. In July 2024, the No. 1 license held by Futu Securities, a subsidiary of Futu Group, was successfully upgraded, allowing it to provide virtual asset trading services to Hong Kong investors, including retail investors. In August 2024, Futu Securities officially became licensed and compliant to offer four spot trading pairs, including Bitcoin, Ethereum, and US dollars, Hong Kong dollars, to qualified individual investors in Hong Kong. In the future, more trading pairs, including LINK and AVAX, as well as additional functions such as deposit and withdrawal of coins, will gradually be expanded.

In January 2025, Panthertrade, a subsidiary of Futu Group, officially received the Virtual Asset Trading Platform License (VATP) issued by the Hong Kong Securities and Futures Commission (SFC), marking another significant progress for the group in compliant operations in the cryptocurrency sector. According to the regulatory requirements of the Hong Kong SFC, the formal operation of the virtual asset trading platform license must be completed in stages. Currently, Panthertrade is actively cooperating with the SFC in the second phase of the evaluation work, which includes assessing policies, procedures, systems, and monitoring measures. Once the evaluation is completed, it can officially commence external operations.

That is to say, the two Hong Kong licensed entities under Futu Group—Futu Securities International (Hong Kong) Limited and Cheetah Trading (Hong Kong) Limited—have respectively obtained a Type 1 license upgrade and a Virtual Asset Trading Platform license (VATP). The two licenses can create a more closed-loop and competitive ecosystem.

In addition to licensed operations in Hong Kong, Futu Group is actively expanding its related businesses in Singapore and the United States, steadily advancing its global strategy for crypto. Futu's overseas subsidiary Moomoo Securities (Singapore) has obtained a Major Payment Institution (MPI) license issued by the Monetary Authority of Singapore (MAS), becoming the first digital broker in Singapore to receive a license for Digital Payment Tokens (DPT) services, and is set to officially launch Crypto trading services in July 2024.

In the U.S. market, moomoo Securities (U.S.) has obtained a federal MSB (Money Services Business) license and MTL (Money Transmitter License) licenses or exemptions in over 40 states, and will launch crypto trading services for 32 currencies in June 2025. Currently, Futu is continuously advancing its licensing applications in other regions where it operates, working to enhance its global crypto financial services network.