Popular Stock Trading Apps in China are Moving to Offer Crypto in the U.S.
Two of China’s online trading platforms have announced they will be entering the crypto markets, however, they will only be supporting this for countries outside of China. Both companies are in the process of applying for the appropriate licenses in the U.S. and Singapore. This comes after Chinese regulators recently reminded the public of their anti-crypto stance.
Futu and Tiger Brokers Expand into the U.S.
Chinese trading services, Futu and Tiger Brokers are set to change the U.S. trading landscape. Not only will they be facilitating crypto trades, but they also allow for stock trading, making them more versatile than a lot of financial platforms already on the market. This could spell bad news for Robinhood and eToro, two of the leading stock trading apps across the globe, as both Chinese platforms can now be considered as direct rivals.
Despite both Robinhood and eToro being popular and widely used, both services come with glaring flaws, making them vulnerable to the newly announced competition. For starters, in the U.S., eToro only supports crypto trading, despite offering crypto, stocks, and forex in other countries. For crypto-exclusive traders, this is no problem, but many investors like to diversify their portfolios and engage with other assets.
Robinhood, on the other hand, supports both crypto and stock trading in the U.S., but it’s missing one huge feature: users cannot withdraw their crypto from the platform. A popular mantra in the crypto world is “not your keys, not your coins”, meaning that if you cannot withdraw your money and store it at your own address, then it is never truly in your possession. And considering how Robinhood does not allow for any crypto withdrawals, it leaves users questioning whether they actually own their crypto assets.
Robinhood has also been under fire for its suspicious behavior during the beginning of the GME and AMC retail investor battle that has been happening throughout 2021. At crucial moments, Robinhood temporarily disabled the purchase of GME and AMC stock, resulting in 49 lawsuits being taken out against them. Feeling betrayed, many retail investors turned their backs on Robinhood and looked elsewhere.
U.S. Demand for Crypto is Extremely High
The fact that two popular Chinese brokers are expanding into the U.S. is huge news for crypto as a whole. Demand is so high that companies are willing to risk entering a foreign landscape to satiate the desires of people in another country. Tiger Brokers and Futu would not have planned to support U.S. crypto trading unless they were confident that there was room for their success.
With Robinhood and eToro, two of the biggest trading firms operating in the U.S. both facing their own issues, this leaves the market wide open for overseas competition. The fact that Tiger Brokers and Futu are reaching out to the US market could be cause for concern with regards to China’s current position on crypto, but make no mistake, demand for crypto in China is still high as citizens are still trading via OTC platforms.
It will be interesting to see how much impact both Chinese platforms have in the US, as there is potential for them to become market leaders. Services such as Robinhood and eToro have proven themselves to be incapable of offering fully-fledged crypto and stock functionalities, and if either of the Chinese brokers can do both, then they could very easily see serious traction in the US.
What impact do you think Tiger Brokers and Futu will have on the US market? Let us know in the comments below.