Tiger Brokers, Futu, Long Bridge and other brokers have been investigated, responding by emphasizing compliance reform and regional isolation, shifting their business focus from user experience to compliance boundaries.

Written by: Yacht; X@AttackOnTATAYA

When trading capability itself becomes a scarce resource

When we previously discussed Hong Kong stocks, US stocks and global asset allocation, the most pressing question was often "what to buy". After the "5.22" incident, a more fundamental question has come to the forefront: what channels can still be used for trading, and whether these channels are compliant, stable, and sustainable. The concentrated rectification of illegal cross-border securities, futures and fund business activities by eight departments has redefined the boundaries for some offshore online brokers providing services to mainland Chinese users. The incident itself is not just a regulatory storm for a few brokers, but more like a reminder at the infrastructure level:trading is not a naturally available public good. Accounts, deposits, withdrawals, quotes, matching, clearing, custody, taxation, and cross-border regulation are all parts of trading capability.

In this context, crypto platforms and on-chain RWA have come back into the spotlight. They are not necessarily safer, nor are they inherently compliant, but they do offer a method of trading organization that is different from traditional brokers.

5.22, countdown to the cleanup of cross-border brokers

On May 22, 2026, the China Securities Regulatory Commission and eight other departments jointly issued the "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures and Fund Business Activities". The rectification goal has shifted from the earlier "suppressing growth" to "clearing existing stock". Since 2022, the regulatory focus has been primarily on prohibiting offshore institutions from illegally soliciting domestic investors and opening new accounts; this round of plans further requires a complete ban on the illegal cross-border operations of offshore institutions after two years of intensive rectification.

For existing investors, the policy arrangement does not mean an immediate closure of positions or forced account cancellations, but rather sets up a one-way exit mechanism. During the concentrated rectification period, offshore institutions are not allowed to continue providing illegal buying transactions, incoming fund transfers, and other services for existing domestic investors, and are only allowed to provide selling transactions and outgoing fund transfers. After the concentrated rectification period ends, relevant institutions are required to completely shut down mainland websites, trading software and supporting services.

On the same day, the CSRC also disclosed advance notice of investigations and administrative penalties against Tiger Brokers (NZ) Limited, Futu Securities International (Hong Kong) Limited, and Long Bridge Securities (Hong Kong) Limited regarding domestic and foreign related parties. The core of the regulatory judgment is that they conducted securities marketing, promoted services, and processed trading instructions in mainland China without the approval of the China Securities Regulatory Commission and profited from it.

Therefore, the essence of this incident is,a reiteration by the regulatory agency of the boundaries of cross-border financial services: providing securities, funds, futures, and derivatives-related business services to investors in mainland China must comply with the domestic regulatory framework.

Pale responses, the cut between growth and compliance

From the public responses, the statements from the relevant brokers share a similar direction: they no longer emphasize growth in mainland users, but rather focus on compliance reform, regional isolation, handling existing stock, and the safety of client assets.

Futu's response emphasizes that it has maintained communication with the China Securities Regulatory Commission and is implementing rectification measures for its mainland operations; while emphasizing that operations in regions outside mainland China are normal. Tiger International's statement focuses on the fact that since 2023 it has stopped opening accounts for users with mainland identities, simultaneously halting external advertising, marketing promotions, and activities, and strengthening account review, identity verification, and anti-fraud management. Long Bridge Securities emphasized that its licensed entity is regulated by the Hong Kong Securities and Futures Commission and other offshore regulatory bodies, with client funds isolated from company operational funds, and that US and Hong Kong stocks are separately managed by corresponding custodial and settlement systems, and it will implement rectification requirements.

These responses indicate that the business logic of internet brokers is switching. In the past, the competitive focus for mobile internet brokers was low-threshold account opening, Chinese interfaces, low commissions, market tools, and community operations; now, the key issues have become where the service targets are located, where marketing activities take place, how trading instructions are processed, and whether the platform has the regulatory permissions to operate in the target market.

The current situation is,the "user experience narrative" of the brokerage industry is yielding to "compliance boundary narrative". When a service crosses multiple jurisdictions, the convenience of the front-end app is no longer the only evaluation criterion; the underlying legal relationships and regulatory permissions determine whether the service can continue to exist.

The real meaning of licenses, white labels, and clearing routes

To better understand this incident,we need to distinguish three concepts: brokerage licenses, introducing broker models, and clearing capabilities.

In the US stock market, the introducing broker and white label model itself is not inherently grey. Introducing brokers are responsible for front-end client acquisition, product interfaces, and customer service, while upstream clearing houses are responsible for trade execution, clearing, custody, and underlying account capabilities. The responsibilities are usually divided through clearing agreements and are subject to corresponding regulatory rules. What users see is an app from a particular broker; but from the asset link perspective, it is crucial to know which bank the funds enter, where securities are held, and who clears the trades, as this is the core of risk control.

According to data, Tiger operated through a New Zealand entity and upstream clearing routes before it went public, and later upgraded to a US-regulated entity through the acquisition of a domestic broker. Futu initially relied more on its Hong Kong license and its US upstream clearing route, and later established a more complete US clearing capability through Futu Clearing Inc. Long Bridge has relevant brokerage qualifications, but its underlying clearing arrangements are not exactly the same as those of Futu and Tiger.

So-called qualifications for compliant US brokers are not a single label but a combination of SEC registration, FINRA membership, CRD number, DTC/NSCC clearing or transaction transfer capabilities, SIPC protection, and other institutional arrangements. Among these, whether they have independent clearing capabilities determines whether the platform can maintain more trading, custody, and risk control processes within its own system.

However, this does not equate to "having an overseas license is enough to serve mainland Chinese users." An overseas license addresses whether or not business can be conducted in the corresponding overseas market; it does not automatically resolve issues of soliciting clients, opening accounts, processing trading instructions, and fund transfers in mainland China. The current round of regulation truly touches upon the boundaries for target clients and service location.

Interwoven old and new demands, Crypto and RWA back in the foreground

Financial demand typically does not disappear due to a contraction in one channel.For some users, the underlying demand for US stocks, Hong Kong stocks, and global asset allocation includes exposure to dollar assets, growth exposure in tech companies, hedging against domestic currency asset fluctuations, and higher volatility trading opportunities. When traditional internet broker entries are restricted, this demand may shift to other channels.

Crypto has re-emerged in the foreground, primarily because stablecoins provide a unified unit of valuation and circulation. Stablecoins such as USDT and USDC abstract "funds" into digital balances that can be moved across multiple platforms, wallets, and protocols. Furthermore, centralized exchanges provide accounts, matching services, market data, leverage, and liquidity. Additionally, on-chain wallets and DEXs allow asset issuers to expose tokenized stocks, funds, bonds, or commodities to on-chain users. Lastly, perpetual contracts provide 24/7 trading, leverage, long and short positions, and cross-asset margin as risk expression tools.

This is also why on-chain RWA has received attention. For crypto users, tokenized stocks are not meant to replicate traditional brokers but to transform traditional financial assets into asset formats understandable by crypto trading systems. However, demand migration does not mean risk disappearance. Instead, risks are likely to shift from licensed brokers to aspects such as deposits and withdrawals, OTC, KYC, smart contracts, price oracles, market makers, and tax reporting. Regulation might also extend from brokers to stablecoin entries, regional restrictions on exchanges, address recognition on-chain, and cross-border tax information exchange. Therefore, the rise of Crypto is not a free expansion in a regulatory vacuum but a new method of risk bearing.

Multiple paths, what is mainstream?

When discussing "buying stocks with fiat/stablecoins", the most common misunderstanding is conflating different products.In reality, at least four categories of paths exist.

The first category is traditional compliant alternatives. This includes QDII funds, Hong Kong Stock Connect, cross-border wealth management connect, Hong Kong bank or brokerage accounts, and overseas compliant brokers. These paths have relatively clear regulatory relationships, but limits, thresholds, target ranges, and trading experiences vary widely.

The second category is stock token spot trading. xStocks on Kraken, and some exchanges integrating xStocks or Ondo assets, typically attempt to provide users with exposure to corresponding US stocks or ETFs. xStocks' official materials indicate that its products are issued by Backed, and some products are supported 1:1 by underlying assets; Ondo Global Markets extends tokenized US stocks and ETFs to on-chain ecosystems such as BNB Chain.The key point is that users hold on-chain tokens or claims to underlying values rather than original stocks in traditional broker accounts. Voting rights, dividend handling, redemption eligibility, regional restrictions, and investor protection must adhere to specific product documentation.

The third category is wallets and on-chain swap entries. For example, Binance Wallet, on-chain DEXs or aggregators may allow users to access tokenized assets like Ondo. This category of paths has higher openness but requires users to independently identify networks, contract addresses, slippage, pool depth, and smart contract risks. Just because an asset can be seen in a wallet does not mean it has sufficient liquidity.

The fourth category is CFDs, stock perpetual contracts, and Pre-IPO/RWA certificates. These products are more akin to trading tools rather than long-term holding tools. CFDs provide spread exposure, perpetual contracts offer leverage and funding rate mechanisms, and Pre-IPO or private equity-type certificates involve more complex issues of information asymmetry, custody, valuation, and exit. They are more trading-oriented and cannot simply be labeled as "buying stocks".

Thus, stock tokens, CFDs, perpetual contracts, and actual stocks are not the same type of asset. They may track the same price symbol, but legal rights, trading periods, sources of liquidity, price formation mechanisms, and default risks differ. The correct question is not "which platform can buy", but rather "what rights does the product provide, who bears the risks, and what are the exit pathways."

Looking ahead, Tokenize OR Re-control Everything

In the coming years, the tokenization of global assets and the re-boundarization of sovereign regulation may accelerate simultaneously. One side is Tokenize Everything: stocks, bonds, funds, gold, private equity, and index exposures are all attempting to enter on-chain systems. The other side is Re-control Everything: regulatory agencies in various countries will redefine boundaries around investor protection, foreign exchange management, anti-money laundering, tax transparency, and cross-border law enforcement.

In this tug-of-war, the user structure may be re-layered. Ordinary investors will likely return more to compliant channels such as QDII, Hong Kong Stock Connect, and domestic funds; high-net-worth individuals may continue to allocate global assets through Hong Kong, Singapore or offshore structures; crypto-native users may continue to seek more efficient trading entries on-chain but bear higher risks of deposits and withdrawals, taxation, platform and contract risks.

Platforms will also differentiate. The more mainstream the exchange, the more it will require regional restrictions, KYC, product stratification, and compliance disclosures; the more open the on-chain protocols, the more they may face issues of liquidity dispersion, information opacity, and inadequate regulatory reach.

To return to the subject, when Trading itself becomes a threshold, the reemergence of crypto platforms is not a simple substitute for traditional finance. It is more akin to a redistribution of trading demands, regulatory boundaries, and risk bearing methods. Traditional brokers offer accounts with clear legal relationships; crypto platforms provide interfaces for high liquidity and combinability in trading.The two will reallocate tasks in more complex ways between different users, different jurisdictions, and different risk preferences.