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Many of you will already be familiar with Tiger Brokers. The Monetary Authority of Singapore (MAS) approved trading platform offers a broad range of investable products including stocks, futures, ETFs, options, warrants, and more. But one asset class missing from the platform is crypto. Until now (if you're in Hong Kong).
Professional investors can now trade 18 cryptocurrencies as well as stocks, futures, US Treasury bonds, and Hong Kong's new Bitcoin ETFs. Such investors must have an investment portfolio valued at more than 8 million HKD and corporate entities with assets exceeding 40 million HKD.
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Tiger Brokers operates under local regulatory oversight and has partnered with HashKey Exchange to offer its services. Transaction fees are competitive at just 0.2% and its digital asset trading offers instant settlement and 24/7 availability.
The NASDAQ-listed exchange plans to extend these services to retail investors pending regulatory approval. It may also introduce additional features like virtual asset spot withdrawal and deposit services.
To learn more about Tiger Brokers' crypto embrace, Blockhead talked to the firm's VP of engineering and head of crypto, Kelvin Liu. With over 15 years of experience in online advertising and the fintech industry as an architect and manager, Liu now leads 300+ talented engineers focusing on building Tiger’s trading system, data and growth platform, and user products.
Pouncing on Institutional Clients
Whether you're a trader or couldn't care less about investment, you've likely seen one of Tiger Brokers' many adverts dotted around Singapore. From bus stops to social media, Tiger Brokers has been actively trying to onboard retail users, making trading as seamless as possible.
However, as institutions ape into crypto, Tiger Brokers is aping into institutional clients. "While we might have started out with a large retail investor customer base 10 years ago, we have always constantly sought to expand and tailor our offerings to investors regardless of background and experience," Liu told Blockhead.
But Tiger Brokers isn't neglecting their retail base. In fact, the exchange plans to expand its offerings to users in Hong Kong.
"Acknowledging the growing interest among retail investors in crypto and traditional asset products, we ultimately plan to open virtual asset trading to them in the future, subject to regulatory approval," Liu said. "Once approved, we aim to offer retail investors the same diverse trading options currently available to our professional clients."
Tame Tiger, Tame Crypto?
You don't need us to tell you how risky crypto is. Just ask SBF. For Tiger Brokers, investing in digital assets is a process done with caution.
"Investing in cryptocurrencies carries its unique risks and rewards," Liu explained. "Recent regulatory advancements, like the approval of crypto ETFs by Hong Kong's Securities and Futures Commission (SFC), are crucial steps towards integrating virtual assets into traditional financial markets. However, due to their volatility, cryptocurrencies should be approached with caution and a well-informed strategy."
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The draw of crypto lies largely in its potential returns but Tiger Brokers still wants to ensure that its clients play safely.
"While cryptocurrencies may potentially offer high returns and serve as an effective diversification tool, it's essential for investors to conduct thorough market assessments, consider their investment preferences, and devise sound risk management strategies before investing," Liu said.
To achieve this, the exchange provides "a secure and transparent trading environment."
"We strongly advise investors to make informed decisions based on comprehensive research and analysis, rather than blindly following trends," Liu added.
Meat-ing Expectations
Institutional investors already have a vast array of options to trade digital assets. In order to stand out, Tiger Brokers is attempting to address some of the grievances these clients face.
"Institutional investors often face the inconvenience of managing multiple accounts across different platforms to access various digital assets and markets," Liu explains.
"Our platform consolidates these needs into a single, integrated solution, allowing investors to trade a wide array of assets including virtual assets such as Bitcoin and Ethereum alongside stocks, options, futures, funds, and ETFs—all in one place, without the need to open and manage multiple accounts. This not only streamlines the trading process but also enhances operational efficiency and reduces the administrative burden."
The exchange launched in Hong Kong with 18 cryptocurrencies but Liu says the exchange is continuing to "monitor the cryptocurrency market for promising new coins that meet our criteria, and plan to expand our crypto offerings in the future, subject to regulatory approval and market conditions."
Hong Kong's Purr-fect for Crypto
Hong Kong has emerged as a major hub for virtual asset trading. Although its ETFs have disappointed on the inflows front, there's no debate that Hong Kong is a leading city for crypto among its Asian peers.
"We've observed a surge in demand for virtual assets among global investors, particularly in Hong Kong," Liu said. "Our move into crypto offerings is a direct response to this trend. This allows us to offer eligible clients the ability to trade cryptocurrencies alongside other global products on a single platform."
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Liu also said the timing of Hong Kong's Securities and Futures Commission (SFC) approving crypto ETFs makes it an "opportune time" for Tiger Brokers to introduce their crypto offerings.
Hong Kong also might be offering products that are arguably broader in their capabilities compared to the US.
"Recently, there have been reports that Hong Kong is considering allowing direct investment in Ethereum Exchange Traded Funds (ETFs) for staking," Liu added. "This could unlock a source of passive income that has been excluded from the plans of potential US issuers. Such regulatory developments demonstrate a progressive approach to fostering the growth of the digital asset ecosystem and will likely encourage more institutions to participate."
Safe Approach
Working with Hong Kong regulators is incredibly important for the exchange too. "Our robust compliance framework includes thorough KYC and AML procedures, and we follow the SFC of Hong Kong's guidelines for our crypto offerings," he said. "We also have stringent security measures to protect our clients' assets and personal information, using advanced encryption technologies and regularly updating our systems and protocols."
"As a financial services provider, we value the role of regulators in creating a safe and transparent trading environment. Regulations should balance investor protection with fostering innovation," he added.
It's therefore incredibly important for the industry to embrace these regulatory shifts. "The industry must adapt to increasingly stringent regulatory expectations to create a stable and reputable environment," Liu said. "As an innovative financial tool, we believe that regulation will find the optimal balance between market development and investor protection. By establishing reasonable and effective regulatory frameworks, we can ensure a convenient and secure experience for storing and using digital assets, while safeguarding public interests and financial stability."
Roaring Environment
Looking ahead, Tiger Brokers believes that the market will continue to mature with the advent of more sophisticated financial products such as crypto-structured products and ETFs.
Liu points towards the SEC's Bitcoin ETF approval as a "clear indication of the direction the digital asset space is headed."
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The firm also believes that regulators in Asia such as Japan, Hong Kong, and Singapore, will continue to set out guidelines and regulations, thus institutional adoption of digital assets is "certainly going to increase."
"Tiger Brokers is committed to playing a significant role in this evolving landscape," Liu said. "By continuously exploring opportunities to expand and improve our offerings, we aim to meet the evolving needs of our clients. This includes supporting the growth of the digital asset space and empowering investors to efficiently capitalise on this burgeoning market."
No Changing Stripes
For institutional investors developing investment strategies for the digital asset space, Liu suggests that they do not veer too far away from their established cautious approaches.
"It would be vital to consider the regulatory landscape of the jurisdiction in which institutional investors plan on investing," Liu said. In fact, crypto's volatility calls for even more caution. "Robust risk management strategies should also be put in place, given crypto’s relatively high volatility as compared to many other traditional asset classes."
"Institutional investors should always evaluate the infrastructures they plan on interacting with, whether it is custodial solutions, trading platforms, or exchanges," he added. "All in all, thorough market research and due diligence practices should inform all investment strategies, especially when it comes to a new asset class."
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Applying old habits can work in the favour of institutions too. "When it comes to portfolio management, the age-old strategy of diversification holds true even for digital assets," Liu said. "Institutional investors should seek to diversify their holdings across the various types of digital assets, from cryptocurrencies to tokens and stablecoins. "
Clawing Towards Legitimacy
Crypto has a notorious reputation. Just ask SBF again. For Tiger Brokers, overcoming this stigma requires effort from the entire space.
"Continued institutional buy-in may lend credibility to and help legitimise the asset class, while also tampering with price volatility over time," Liu explained. "The overall digital asset market will also mature alongside the growth of institutional involvement as institutional-grade infrastructures and practices enter the fold and become increasingly commonplace."
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Tiger Brokers is doing its part too, by assisting in risk assessment. When asked what risk management tools and strategies the firm recommends for mitigating volatility in a crypto portfolio, Liu said the firm, "continuously assesses and monitors the risk levels of the portfolio, and uses tools that provide real-time analytics and risk metrics to stay informed about market conditions and potential risks."
"At Tiger Brokers, we hope to develop tools and insights, helping investors to better prepare for extreme market events and implementing appropriate risk mitigation measures."
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