The recent granting of Hong Kong’s first virtual asset trading license to a Chinese mainland-backed securities firm has sent shockwaves across financial markets. When Guotai Junan International secured the territory’s inaugural full virtual asset license for a Chinese broker, it didn’t just ignite investor excitement—it triggered a volatile surge in related stock prices and thrust stablecoins into the spotlight like never before.
On June 26, Guotai Junan International surged nearly 90% in early trading, only to reverse course and close in negative territory by afternoon. Victory Securities experienced even more dramatic swings, briefly spiking over 160% before settling with a still-impressive gain of under 50%. This rollercoaster ride underscores how market sentiment can rapidly shift in response to regulatory milestones—and how deeply intertwined stablecoin prospects have become with traditional financial players.
Over 30 Brokerages Upgrade to Virtual Asset Services
Victory Securities’ sharp rise was directly tied to market enthusiasm over virtual asset licensing. The company, primarily offering brokerage services, made history in 2023 as Hong Kong’s first firm licensed to provide virtual asset trading, advisory, and asset management services simultaneously.
Today, more than 30 brokerage firms have successfully upgraded their Type 1 licenses—allowing them to offer virtual asset trading through integrated account structures. According to industry sources, major players like China Merchants Securities International are also in the process of applying for similar upgrades, signaling a broader institutional push toward digital asset integration.
Sun Ting, Chief Strategy Officer and Non-Bank Financial Analyst at Dongwu Securities, notes that Guotai Junan’s regulatory approval acts as a catalyst, accelerating the pace for other top-tier Chinese brokers. Firms such as CITIC Securities, CICC, and China Merchants Securities—with strong Hong Kong subsidiaries—are now better positioned to enter the space. As virtual assets become increasingly compliant, an entire ecosystem centered on digital asset issuance, circulation, management, and application is rapidly taking shape.
More Than 140 Research Reports Focus on Stablecoins
Since late May, interest in stablecoins has surged. Data from Choice shows over 140 research reports published in the past month alone that mention "stablecoin" in depth. Brokerages are conducting investor calls, hosting roadshows, and analyzing potential use cases with growing urgency.
At their core, stablecoins are cryptocurrencies pegged to stable underlying assets—typically fiat currencies like the U.S. dollar or commodities. While they promise price stability compared to volatile cryptocurrencies like Bitcoin or Ethereum, their actual stability depends heavily on the credibility and transparency of their reserves.
According to CITIC Securities, stablecoin transaction volumes remain relatively small compared to traditional systems. SWIFT processes around $12.5 trillion annually in cross-border payments. In contrast, FXC Intelligence estimates that stablecoin transaction volume reached $5.7 trillion in 2024—significant growth, yet still a fraction of global financial flows.
CICC identifies several sectors poised to benefit from stablecoin adoption:
- Banking IT providers, especially those involved in CIPS (Cross-border Interbank Payment System), may adapt their infrastructure for stablecoin settlements.
- Telecom operators could leverage their vast user bases and advanced digital networks to facilitate mass adoption of stablecoin-based payments.
- Cryptocurrency exchanges remain central as liquidity hubs.
- Financial institutions serving as gateways for institutional-grade stablecoin transactions stand to gain significant new revenue streams.
Could Stablecoins Elevate Broker Valuations?
In capital markets, many analysts believe stablecoin integration could significantly boost valuations for brokerage firms. Guoha Securities suggests that stablecoins may redefine the role of brokers—from mere transaction facilitators to key players in asset tokenization and cross-border clearing.
This strategic shift could transform brokerages into critical infrastructure nodes within the emerging digital economy. As they enable seamless movement of value across borders and asset classes, their earnings potential expands beyond commissions into data services, custody solutions, and structured product offerings.
Overall, the consensus is clear: stablecoins represent not just a niche product but a fundamental evolution in financial architecture—one that could justify higher price-to-earnings multiples for forward-thinking firms.
Are Stablecoins Really Stable? Debunking Common Myths
Amid rising hype and bullish market reactions, a crucial question emerges: Are stablecoins truly stable?
The research team led by Liang Zhonghua at Guotai Haotong Securities highlights several widespread misconceptions:
“Stablecoin stability is not absolute—it's conditional and relies on both technological integrity and the strength of its backing assets.”
Key Misunderstandings About Stablecoins:
- Relative, Not Absolute Stability: While designed to maintain parity with reserve assets (e.g., $1 USD), stablecoins face risks of de-pegging due to market panic, poor collateral management, or smart contract flaws.
- Not All Currencies Can Dominate Stablecoin Markets: Only currencies with global trust—like the U.S. dollar or euro—are likely to sustain large-scale stablecoin ecosystems. We may see a “winner-takes-most” scenario where dominant fiat-backed tokens crowd out others.
- Dollar Stablecoins Don’t Rescue U.S. Debt Markets: Despite speculation, current levels of dollar-pegged stablecoins have minimal impact on U.S. Treasury demand or monetary policy dynamics.
- No Significant Expansion of Money Supply: Stablecoins are generally backed one-to-one with reserves; they don’t inherently increase money supply unless issued without proper backing.
- Limited Immediate Impact on RWA Growth: While stablecoins can streamline transactions involving real-world assets (RWA), broader adoption depends on legal frameworks, asset quality, and investor confidence—not just payment rails.
Navigating Risk in a Fast-Evolving Landscape
Galaxy Securities advises investors to recognize that while policy tailwinds may fuel short-term volatility in stablecoin-related stocks, long-term industry health hinges on sustained regulatory clarity and compliance.
Additionally, virtual asset experts warn against speculative excess:
- Cryptocurrency markets are inherently volatile—investors must conduct thorough due diligence.
- Hong Kong-based platforms do not serve mainland Chinese users; accessibility limitations apply.
- Platform security breaches and smart contract vulnerabilities pose real risks. Choosing reputable, audited exchanges is essential.
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Frequently Asked Questions (FAQ)
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as the U.S. dollar, gold, or other financial instruments.
Q: Why are brokerages getting involved in stablecoins?
A: Brokers see opportunities in offering digital asset trading, custody, and settlement services. Stablecoins enhance cross-border efficiency and open new revenue channels in tokenized finance.
Q: Can stablecoins lose value?
A: Yes. Though designed to be stable, they can de-peg due to reserve insolvency, loss of confidence, or technical failures—examples include the collapse of TerraUSD in 2022.
Q: Are all stablecoins backed 1:1?
A: Ideally, yes—but transparency varies. Reputable issuers undergo regular audits; others may use riskier strategies like algorithmic backing or partial reserves.
Q: How do regulations affect stablecoin development?
A: Clear regulations boost investor confidence and institutional adoption. Jurisdictions like Hong Kong are setting frameworks that balance innovation with consumer protection.
Q: Can I invest in stablecoin-related stocks safely?
A: As with any investment, diversification and risk assessment are key. Focus on firms with strong fundamentals, regulatory compliance, and clear digital asset strategies.
Core Keywords: stablecoin, virtual asset license, brokerage innovation, digital finance, cross-border payments, tokenized assets, financial infrastructure, regulatory compliance