Futu Holdings Limited

Futu's business model in the cryptocurrency market mainly revolves around its "one-stop" financial service platform, aiming to provide users with a convenient, compliant, and low-threshold cryptocurrency trading experience. Specifically, it includes:

1. Licensed and compliant operation: Futu Securities, as a licensed institution of the Hong Kong Securities and Futures Commission (SFC), provides virtual asset trading services and is subject to strict regulatory and operational standards. This offers investors a safe and secure trading environment, which is one of its core competitive advantages.
2. Direct fiat trading: Futu supports users to directly use Hong Kong dollars (HKD) and US dollars (USD) for cryptocurrency trading, without the need to first exchange for stablecoins like USDT. This simplifies the trading process, reduces exchange rate fluctuation risks, and lowers the investment threshold (minimum HKD 80 / USD 10).
3. Multi-asset class integration: The Futu NiuNiu App integrates cryptocurrency trading with traditional assets such as stocks, ETFs, and options, allowing users to manage and trade multiple assets on a single platform, enhancing the liquidity and efficiency of funds. 4.7x24 hours trading: The cryptocurrency market operates year-round without breaks, and Futu provides 24/7 trading services, allowing users to seize market opportunities at any time.
4. Professional analysis tools: Provide professional chart analysis tools and technical indicators to help users analyze cryptocurrency trends.
5. Deposit and Withdrawal Services: Futu has launched deposit services for Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), and plans to introduce withdrawal functions in the future and support more mainstream cryptocurrencies for deposits and withdrawals.
6. For different investors: Futu distinguishes between retail investors (RI) and professional investors (PI), offering different tradable currency pairs. For example, USDT and other various cryptocurrency trading pairs are currently limited to professional investors.

Futu's profit model in the cryptocurrency sector mainly includes:

1. Platform usage fee: Although Futu promotes "0 commission" trading, it will charge a platform usage fee. According to search results, the platform usage fee is 0.08% of the transaction amount, with a minimum of 1.99 USD or 15 HKD per order. This is its main source of trading-related income.
2. Price difference (spread): As a trading platform, Futu profits from the small difference (spread) between the buying and selling prices. Although the search results do not directly provide the specific spreads for cryptocurrencies, they mention "competitive spreads."
3. Client Asset Management: By attracting users to deposit their cryptocurrency assets onto its platform, Futu can manage these assets and potentially earn interest income or generate revenue through other financial services (such as lending, staking, etc.), although current information mainly focuses on deposit services, which may expand in the future.
4. Value-added services: For example, providing more advanced market data, analysis tools, or exclusive services, which may charge additional fees to professional investors or advanced users.
5. Customer Acquisition and Cross-Selling: The cryptocurrency business serves as an entry point to attract new users, which can be converted into users of traditional financial products, thereby increasing overall revenue through cross-selling other high-profit products.

Futu's cryptocurrency profit model, especially the "zero commission" + platform usage fee model, as well as its compliance and one-stop service, has the following functions and significance: • Lowering the entry barrier for users: By promoting "zero commission" and a lower investment threshold, it has attracted a large number of retail investors who are interested in cryptocurrency but are concerned about high costs and complex operations. • Enhance user engagement: Integrate cryptocurrency trading into the existing Futu NiuNiu App, allowing users to avoid switching between different platforms, thereby improving user experience and platform stickiness. •Building trust and compliance advantages: In the chaotic landscape of the cryptocurrency market, Futu's licensed and compliant operations provide users with a stronger endorsement of trust, attracting investors who prioritize asset security. • Expand user base: The cryptocurrency market has a large user base, and Futu can effectively expand its user base by providing related services, especially for "dual-asset" investors who are interested in both traditional finance and cryptocurrencies. •Diversified sources of income: Cryptocurrency trading fees and potential asset management earnings have brought new revenue growth points for Futu, contributing to the diversification of its business development. • Risk Hedging: For traditional stock investors, cryptocurrency businesses provide a new tool for hedging market risks, as the stock market and the crypto market often exhibit different volatility cycles.

Futu currently mainly supports and influences the following cryptocurrencies: •Bitcoin (BTC): As the largest cryptocurrency by market capitalization, Futu offers trading pairs of BTC/USD and BTC/HKD, and supports BTC deposits. Futu increases the liquidity and accessibility of BTC, especially in the compliant market in Hong Kong, by providing convenient trading channels and market information. Its "zero commission" strategy may also encourage more retail investors to participate in BTC trading. • Ethereum ( ETH ): Futu also offers ETH /USD and ETH /HKD trading pairs, and supports ETH deposits. As the core of the smart contract platform and DeFi ecosystem, its launch on Futu also provides investors with an entry point to participate in the Web3.0 ecosystem. The platform's usage fees and trading convenience will also affect the trading volume of ETH. • Tether (USDT): The USDT deposit service (currently limited to professional investors) is crucial for Futu's business expansion. As the primary stablecoin, the introduction of USDT at Futu allows professional investors to manage their funds more flexibly and may pave the way for the future introduction of more crypto assets. The introduction of USDT may also enhance the efficiency of fund circulation between fiat currency and cryptocurrencies within the Futu platform. • AVAX (Avalanche) and LINK (Chainlink): Futu also supports trading pairs of AVAX/USD and LINK/USD, indicating that Futu is not only focused on mainstream cryptocurrencies but also pays attention to and provides trading for some popular public chain tokens and DeFi infrastructure tokens, meeting the needs of some investors for diversified cryptocurrency asset allocation. • Other professional investors can trade coin pairs: including AAVE, APT, ARB, DOGE, IMX, IOTX, KAIA, LTC, OP, POL, SOL, TON, UNI, XRP, etc. The introduction of these cryptocurrencies expands Futu's coverage in the cryptocurrency market, meets the broader trading needs of professional investors, and may also indirectly enhance the liquidity and recognition of these cryptocurrencies in the compliant market.