VBIT Hong Kong
On 22 May 2026, the China Securities Regulatory Commission (CSRC), together with the Ministry of Industry and Information Technology, Ministry of Public Security, People's Bank of China, State Administration for Market Regulation, National Financial Regulatory Administration, Cyberspace Administration of China and State Administration of Foreign Exchange, issued an implementation plan to comprehensively tackle unlawful cross-border securities, futures and fund operations. On the same day, the CSRC opened investigations into Futu Holdings, Tiger Brokers and Longbridge Securities for activities including unlawful securities operations in mainland China and issued advance notices of administrative penalties.
Futu Holdings faces proposed fines and confiscations of approximately RMB1.85 billion, while Tiger Brokers faces approximately RMB411.2 million. Each company's founder faces an individual RMB1.25 million fine. Although Longbridge has not disclosed an amount, it has been identified alongside the other two as an unlawful cross-border operator, facing confiscation of all illegal proceeds and heavier penalties. Following the announcement, US-listed Tiger and Futu shares each fell more than 30% at one point in pre-market trading.
This is more than an isolated penalty. A two-year enforcement period, an exit-only policy, mandatory closure of existing accounts and action across the transaction chain by eight authorities amount to a transformation of regulation covering fund inflows and outflows. For mainland investors accustomed to offshore brokers such as Futu and Tiger for Hong Kong and US equities, especially high-net-worth investors allocating substantial funds overseas, this analysis addresses:
·What does the plan mean for existing accounts?
·Which compliant channels should future overseas investments use?
·How can alternative investments such as crypto assets be funded and cashed out safely under the new regulatory landscape?
1. Eight authorities tackle unlawful cross-border securities: Regulation of offshore brokers enters its strictest phase
1.1 From individual penalties to comprehensive enforcement
The grey area in cross-border securities has persisted since the CSRC first called on Futu and Tiger to rectify their businesses at the end of 2022. This round is different.
The eight central authorities jointly issued the plan for nationwide implementation with State Council approval. Its objective is to eliminate unlawful cross-border operations by offshore institutions through two years of concentrated enforcement, decisively stopping illegal activities while handling existing business prudently. Strict prohibitions cover the full chain from marketing and account opening to trade-instruction processing and fund transfers:
·Marketing restrictions: Offshore institutions may not conduct any marketing in mainland China, including operating websites or trading software, publishing promotional information or distributing investment updates.
·Account-opening restrictions: Internet platforms and online self-media may not direct customers to offshore institutions for account opening.
·Trading-service restrictions: Offshore institutions may not process trade instructions in mainland China.
·Stronger fund checks: Regulators will strengthen compliance reviews of foreign-exchange remittances and combat unlawful outflow channels such as underground banks.
1.2 Penalties for Futu, Tiger and Longbridge expose offshore-broker operating risks
According to CSRC announcements and broker disclosures:
Futu Holdings
Proposed fines and confiscations: RMB1.85 billion
Individual fine for the founder: RMB1.25 million
Grounds: Unlawful securities, fund and futures operations in mainland China
Tiger Brokers
Proposed fines and confiscations: RMB411.2 million
Individual fine for the founder: RMB1.25 million
Grounds: Activities including unlawful futures brokerage by mainland-related entities
Longbridge Securities
Proposed fines and confiscations: Amount not disclosed
Individual fine for the founder: Not disclosed
Grounds: Identified alongside Futu and Tiger as an unlawful cross-border operator, facing confiscation of all illegal proceeds and heavier penalties
Combined fines and confiscations exceed RMB2.2 billion, making this the harshest regulatory action in the history of cross-border brokers. The CSRC states that related mainland and offshore entities illegally operated securities businesses in mainland China, violating securities, fund and futures laws and disrupting market order, and must face decisive action.
1.3 Exit-only treatment of existing accounts: What happens to Futu and Tiger accounts?
Investors are particularly concerned about existing accounts:
The plan requires an orderly reduction of existing unlawful cross-border accounts. During a two-year transition, new purchases are prohibited; only sales or continued holdings are permitted.
If you still hold positions through Futu or Tiger, you may sell during the transition but may not buy new shares. After the transition, offshore institutions must close mainland websites and trading software and stop all mainland trading services.
The plan progressively reduces unlawful mainland investor accounts and assets. High-net-worth investors will therefore need to exit existing offshore-broker assets in an orderly way over the next 24 months, making it urgent to reconsider where funds will be held.
2. Hong Kong's SFC also tightens account opening: A wider upgrade of cross-border fund-flow controls
2.1 Stricter brokerage checks focus on forged documents and mainland investor accounts
On the same day as the mainland plan, 22 May 2026, Hong Kong's Securities and Futures Commission issued a regulatory circular addressing deficiencies in local brokers' account-opening practices.
After reviewing practices at 12 securities brokers, the SFC identified significant shortcomings, including suspected use of forged account-opening documents, mostly involving mainland investors.
2.2 Seven SFC measures strengthen same-name fund transfers, AML and account reviews
Under the SFC circular, licensed corporations must immediately implement these additional measures:
1.Close suspicious accounts: Investment accounts opened using suspicious or forged documents must be closed immediately.
2.Close dormant zero-balance accounts: Long-inactive investment accounts with no balance must also be closed.
3.Obtain written declarations: New investment accounts require a written investor declaration.
4.Use same-name bank accounts: Settlement, deposits and withdrawals must pass only through accounts held in the customer's own name at eligible banks. Third-party accounts are strictly prohibited.
5.Enhance due diligence: Fully assess overseas brokers' underlying client types and the expected nature and scale of transactions.
6.Strengthen AML measures: Comprehensively review and improve controls against money laundering and terrorist financing.
7.Conduct strict background reviews: Strengthen ongoing monitoring of business relationships and transactions.
Practices such as easy account opening and transfers through differently named accounts are now prohibited. Mainland investors face substantially higher entry requirements and tighter fund-flow restrictions when investing in Hong Kong shares through local brokers.
2.3 Coordinated mainland and Hong Kong regulation creates closed-loop oversight of cross-border funds
The CSRC is cutting off unlawful cross-border marketing, account opening and trading at the mainland source of funds, while Hong Kong's SFC raises account-opening standards and addresses forged documents and money-laundering risks at the destination. Together, the measures create end-to-end oversight from outbound funds to offshore accounts.
"Funds can go overseas; the key is to use the right channel."
3. Compliant overseas investment remains available: Stock Connect, QDII funds or Wealth Management Connect?
3.1 Regulation targets unlawful channels rather than closing overseas asset allocation
The enforcement targets unlawful cross-border operations, not mainland investors' overseas asset allocation. The plan expressly guides investors towards legitimate channels such as southbound Stock Connect, Qualified Domestic Institutional Investor (QDII) schemes and Cross-boundary Wealth Management Connect.
The signal is clear: compliant overseas investment channels remain open and may gain greater opportunities.
3.2 Comparing Stock Connect, QDII funds and Wealth Management Connect
Southbound Stock Connect
Investments: Around 600 eligible Hong Kong stocks
Funding threshold: RMB500,000
Daily quota: RMB10.5 billion each for Shanghai and Shenzhen
Fund-transfer convenience: Funds debited directly from an A-share account
Suitable for: Investors with A-share accounts who are familiar with stock trading
QDII funds
Investments: Overseas equities, bonds, REITs and other assets across global markets
Funding threshold: No specified minimum
Daily quota: Subject to the fund company's foreign-exchange quota
Fund-transfer convenience: Redemption proceeds returned to a mainland bank account
Suitable for: Investors seeking global diversification without selecting stocks themselves
Cross-boundary Wealth Management Connect
Investments: Wealth-management products, funds and bonds
Funding threshold: RMB1 million in the Greater Bay Area
Daily quota: Individual quota of RMB3 million
Fund-transfer convenience: Dedicated accounts and closed-loop fund flows
Suitable for: Greater Bay Area residents and investors with greater demand for wealth-management products
3.3 Compliant investment channels may benefit as unlawful channels are removed
A non-bank financial analyst at China Securities said the enforcement would steer overseas investment towards compliant channels, potentially increasing demand substantially. Removing unlawful referral channels could create a fairer customer-acquisition environment and reshape cross-border securities brokerage.
For investors, moving funds promptly from unlawful to compliant channels is both a legal requirement and a proactive step to protect assets.
4. Compliant crypto-asset cash out: Handling large funds safely for high-net-worth clients
4.1 Cash-out challenges: Rising risks in exchange withdrawals, online shops and underground channels
The three channels above primarily address secondary-market securities investment. They do not meet the needs of high-net-worth crypto holders seeking fiat cash for the real economy or global asset allocation.
Holders of Bitcoin, Ether, USDT or other crypto assets face different difficulties:
·Crypto assets cannot be cashed out directly through Stock Connect or QDII funds.
·Online exchange shops and Telegram group trades are high risk and may involve money laundering or stolen funds, leading to account freezes or judicial investigations.
·Direct exchange withdrawals to bank accounts may trigger banks' AML models, blocking funds or subjecting accounts to risk controls.
As regulation tightens, compliant crypto cash out has become a major concern for many high-net-worth clients.
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