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In this photo, a Bitcoin logo is displayed on a smartphone with stock market percentages in the background.
Omar Marques | SOPA Pictures | LightRocket | Getty Images
BEIJING Two of the Chinese rivals of the Robinhood stock trading app are turning to cryptocurrencies as a way to compete abroad.
The companies, Futu and Tiger Brokers, revealed in earnings calls last month that they were applying for licenses in Singapore and the United States that would allow local clients to trade digital currencies.
The move comes as cryptocurrencies such as bitcoin have returned to center stage in recent months, as Chinese regulators have stepped up efforts to curb 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 computer process that allows participants to earn bitcoin.
But in the world of financial trading, demand for cryptocurrencies is high, as the price of bitcoin hit record highs above $ 60,000, before dropping sharply to around $ 35,000.
Robinhood, which started bitcoin and ethereum trading in the United States in early 2018, has added 3 million customers per month this year for its crypto business. In April, US-based cryptocurrency trading site Coinbase debuted on the Nasdaq.
“We are hearing a lot of interest from our users around the world in terms of crypto. We have listened to this,” Arthur Chen, chief financial officer of Futu, told CNBC last week. He said the company hopes to offer cryptocurrency-related products by the end of this year.
Futu and Tiger Brokers both started out primarily with Chinese employees of big tech companies like Alibaba and Baidu. Since these companies are listed in the United States, this has sparked the interest of their employees in trading stocks overseas.
However, the two companies are increasingly focusing on markets outside of mainland China. In addition to essentially banning yuan-bitcoin transactions, Beijing tightly controls capital flows outside the mainland.
Futu has gained 100,000 paying customers in Singapore less than three months since launching 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 face competition not only from Robinhood, but also from traditional players such as Interactive Brokers. Futu and Tiger both seek to attract clients with an in-app social network where users can exchange trading ideas and watch investor education courses.
At the end of March, Futu said it had 789,652 clients with assets in their trading accounts, more than three times more than a year ago.
Tiger said the number of customers with deposits more than doubled in the first quarter from a year ago to 376,000.
Cool interest in IPOs
Customers are very interested in cryptocurrencies and Coinbase’s stock listing has attracted new users, Tiger Brokers CEO Tianhua Wu told CNBC last week.
But he said general user interest in the initial public offerings has cooled compared to last year. While the exuberance sparked by IPOs could have generated $ 1 billion or more in orders around a listing, offers are now attracting far fewer orders, Wu said.
Last week Futu and Tiger Brokers were added to the MSCI stock indexes, which are followed by trillions of dollars of global investment.
Learn more about cryptocurrencies from CNBC Pro
CNBC’s Kate Rooney contributed to this report.
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