Hong Kong Crypto License Sparks Investor Frenzy in Chinese Stocks

Mainland investors are flooding into Hong Kong-listed stocks tied to cryptocurrency activity, circumventing China's strict ban on digital asset trading. The surge follows Guotai Junan International's landmark license to operate a virtual asset business, with its shares nearly tripling in a single day of frenzied trading.

Hong Kong's regulatory shift—including May's stablecoin bill—has created a backdoor for Chinese capital seeking crypto exposure. Guotai's trading volumes briefly surpassed Alibaba's on the Hang Seng Index, underscoring pent-up demand from investors legally barred from holding digital assets directly.

Morgan Stanley analysts suggest China's tacit approval of this channel may reflect strategic concerns about dollar-dominated stablecoins. The brokerage's license represents the first major breach in Beijing's crypto firewall since the 2021 prohibition.