Asian Crypto Trading: Hong Kong’s New Stablecoin Bill Sparks Excitement Among Analysts
Get ready for a potential shake-up in Asian crypto trading! Stock analysts are buzzing with excitement about a big boost coming to the market, all thanks to Hong Kong’s new stablecoin bill, which is set to take effect this Friday.
Now, if you’re not familiar, stablecoins are a type of virtual asset that gets its value from government-issued currencies, like the U.S. dollar. Hong Kong’s new bill basically formalizes how financial companies can issue and manage these digital assets, much like the GENIUS Act we have in the U.S.
For now, analysts at Morgan Stanley believe the main use for stablecoins will be in crypto trading. They think this could really draw in more big-time institutional investors to the world of virtual assets. When it comes to picking a winner, they’re really keen on Futu Holdings (FUTU), giving it an “overweight” rating and a price target of $164.25.
However, Citi analysts have a different favorite: Up Fintech (TIGR), also known as Tiger Brokers. They recently upgraded Up Fintech to a “buy” from “neutral,” according to a report published on July 21st. They’re keeping a “neutral” rating on Futu for now, noting its recent strong performance.
Both Futu and Up Fintech are online brokerages that handle both stock and cryptocurrency trading. They actually listed in the U.S. back in 2019, even before Robinhood went public! While they started out in mainland China, they’ve shifted their focus more towards Hong Kong and Singapore due to China’s strict capital controls and crypto bans.
The crypto trading market in Hong Kong and Singapore is huge, estimated at a whopping $640 billion, even with competition from other unlicensed crypto exchanges. This puts Up Fintech and Futu in a prime position to see gains similar to what Robinhood has experienced. Citi analysts pointed out that a major reason for Robinhood’s stock surge recently is its booming crypto trading revenue, which doubled in the first quarter from a year ago. That’s much faster than Robinhood’s overall revenue growth of 50% during the same period. In fact, crypto’s share of Robinhood’s total revenue has jumped from 3% in 2020 to 21% in 2024, according to the Citi report. Robinhood is expected to release its earnings this Wednesday.
Citi analysts are feeling pretty optimistic, raising their price targets for both stocks: Up Fintech (TIGR) to $14 from $9.50, and Futu (FUTU) to $176 from $113. Part of their increased optimism for Up Fintech comes from potential business opportunities with Avenir Group, an investment firm connected to the founder of the bitcoin trading exchange Huobi. Avenir actually acquired a 5.9% stake in Up Fintech’s stock in late April. Citi believes there’s “potential upside for TIGR if i) Avenir Group could use TIGR as the designated crypto exchange for OTC trading; ii) if Avenir Group could potentially use TIGR as its designated custodian bank, paying TIGR a higher custodian fee to help support TIGR’s crypto biz development.”
Understanding the Landscape: Hong Kong’s Unique Position
Of course, it’s important to remember that the crypto environment in the U.S. is quite different from Hong Kong’s. While mainland China has taken a more conservative stance, Hong Kong, as a special administrative region, has become the country’s testing ground for staying competitive in global finance.
Both Citi and Morgan Stanley analysts expect Hong Kong’s support for stablecoins to initially focus on how the Chinese yuan can be used for international payments. However, the region’s broader ambitions are clear; Eric Trump, son of U.S. President Donald Trump, is even slated to headline a bitcoin conference in Hong Kong next month.
What do you think about Hong Kong’s move into stablecoins and its potential impact on the Asian crypto market?