China’s Robinhood rivals pile into the crypto craze

In this photo illustration, a Bitcoin logo is displayed on a smartphone with exchange percentages in the background.

Omar Marques | SOPA Pictures | LightRakete | Getty Images

BEIJING – Two of China’s rivals to stock trading app Robinhood are looking for cryptocurrencies to compete overseas.

Futu and Tiger Brokers announced during the conference call last month that they are applying for licenses in Singapore and the United States that would allow local customers to trade digital currencies.

The move comes as cryptocurrencies like Bitcoin have come back into the spotlight in recent months, while Chinese regulators have stepped up efforts to curb speculation in the market. In the past few weeks, authorities have issued new warnings about digital forex trading and crackdown on bitcoin mining – an energy-intensive computing process that enables participants to earn bitcoin.

But in the world of financial trading, the demand for cryptocurrencies is high as the price of Bitcoin rose to a record high of over $ 60,000 before falling sharply to around $ 35,000.

Robinhood, which launched Bitcoin and Ethereum trading in the US in early 2018, has gained 3 million customers per month for its crypto business this year. In April, the US cryptocurrency trading site Coinbase made its debut on the Nasdaq.

“We hear great interest in crypto from our users around the world. We listened to 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 got their start mostly from Chinese employees at large tech companies like Alibaba and Baidu. Since these companies are listed in the US, it piqued their employees’ interest in trading stocks overseas.

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

Futu has gained 100,000 paying customers in Singapore in less than three months since it was launched in early March, Chen said. He said about a quarter of new paying customers in the first quarter were from Singapore and the United States

In the international retail market, the two companies not only compete with Robinhood, but also with traditional players such as Interactive Brokers. Both Futu and Tiger try to attract customers with an in-app social network where users can share trading ideas and view investor training courses.

By the end of March, Futu said it had 789,652 customers with assets in their trading accounts, more than three times what it was a year ago.

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

Cooling interest in going public

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

However, the general interest of users in IPOs has cooled compared to last year. While the exuberance of IPOs back then may have generated orders worth $ 1 billion or more around a listing, deals are now attracting far fewer orders, Wu said.

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

Read more about cryptocurrencies from CNBC Pro

– CNBC’s Kate Rooney contributed to this report.

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