Today, the news about Tiger Futu and other brokerages being rectified has gone viral, and its influence on the traditional financial sector should be comparable to that of 1994 on the crypto world. The familiar joint action by eight ministries is grand in scale, targeting the core brokerages first, and also cracking down on online media and illegal intermediaries. In other words, not only are core operations not allowed to continue, but activities like publicity, rebate sharing, and user acquisition that border on gray areas are also prohibited. The goal is to tighten controls step by step, further shift from virtual to real assets, and strengthen foreign exchange regulation.

To some extent, this might be a good thing for the crypto industry, which is accelerating the onboarding of new U.S. stock assets, as both CEX and DEX have already gone overseas, decentralizing and de-Chinese-ifying themselves. It’s not that investigations are impossible; after all, we must trust the country’s long-arm jurisdiction. If they really want to crack down hard, using overseas entities or holding accounts under overseas identities will be ineffective. As long as they operate openly within China, they can be investigated and penalized. But in practice, enforcement usually considers the balance of enforcement costs and benefits. The crypto industry remains relatively safe for now.

Traditional brokerages receiving such notices will probably have to honestly rectify and withdraw, but the demand for such services will not disappear out of thin air, nor will it be completely eradicated by a single campaign. This demand might transform into a driving force, providing an opportunity to change the existing industry landscape. In the short term, the crypto industry may be able to benefit from some spillover and transfer of traffic, but in the long run, if the scale grows to a level that must be taken seriously, there could be some form of increased regulation.