Traditional Brokerages Eye Crypto Market Entry
Major online brokerages like Futu Securities and Tiger Brokers have recently announced plans to expand into cryptocurrency services, marking a significant shift in financial market dynamics.
Key Developments:
- Tiger Brokers confirmed applications for regulatory licenses in the U.S. and Singapore to serve international clients
- Futu Securities identified cryptocurrency exchange services as a strategic priority for late 2021
- Both firms emphasize services will exclusively target overseas markets due to domestic regulatory constraints
The Staggering Profitability of Crypto Exchanges
Cryptocurrency exchanges have emerged as the most profitable segment in blockchain finance, particularly during Bitcoin's 2021 bull run.
Comparative Profit Analysis (Q1 2021):
| Platform | Daily Profit (USD) | Quarterly Profit | Employee Count |
|---|---|---|---|
| Binance | $33.3M | $3B | 1,000+ |
| Coinbase | $8.57M | $771.5M | 1,700+ |
| Huobi | $16.67M | $500M* | N/A |
| Futu Securities | $1.46M | $132.9M | N/A |
| Tiger Brokers | $0.18M | $19M | N/A |
*Estimated based on token burn mechanisms
👉 Discover how leading exchanges achieve these profit margins
Revenue Streams Powering Exchange Profits
Core Income Sources:
- Trading Fees (0.08%-0.2% per transaction)
- Derivatives Trading (Higher-margin contracts business)
- Token Listings (Project onboarding fees)
- Withdrawal Charges (Network processing fees)
- Investment Returns (Exchange-owned asset portfolios)
Tokenomics Models:
- Binance: Burns 20% of profits in BNB quarterly ($600M Q1 2021)
- Huobi: Allocates 20% of revenue to HT buybacks ($104M April 2021)
- OKEx: Destroys 30% of spot trading fees ($35.6M quarterly)
Regulatory Landscape for Global Operations
Licensing Frameworks:
United States:
- MSB registration with FinCEN
- State-level requirements (e.g., NY BitLicense)
Singapore:
- Payment Services Act compliance
- MAS oversight for crypto businesses
European Union:
- E-Money Institution licensing
- MiCA framework (forthcoming)
Notable Applications:
Over 300 entities including Alibaba and Binance currently seeking Singaporean approval, with rigorous vetting processes underway.
Industry Perspectives on Market Evolution
Dr. Yu Jianning, Blockchain Committee Chair:
"Cryptocurrencies represent a paradigm shift blending technology, finance, and organizational innovation. While creating immense value, they demand novel regulatory approaches to address associated risks."
Professor Liu Changyong, Chongqing Technology and Business University:
"Financial applications remain blockchain's most mature implementation, with exchanges naturally becoming the profit centers in this ecosystem."
FAQ: Understanding Exchange Economics
Q: How do crypto exchange profits compare to tech giants?
A: Binance's Q1 2021 profits ($3B) exceeded 40% of Tencent's earnings ($4.78B) with <2% of its workforce.
Q: Why are traditional firms entering crypto now?
A: The combination of proven profitability and mainstream institutional adoption makes digital assets an essential service for modern brokerages.
Q: What prevents direct competition with major exchanges?
A: Established platforms benefit from network effects, technological infrastructure, and years of regulatory compliance experience.
Q: How sustainable are current profit levels?
A: While tied to market cycles, diversified revenue streams and growing institutional participation suggest long-term viability.