Primitive Ventures: After US Brokerages Exit, Chinese Retail Investors Are Searching for the 'Missing Buy Button'

Author: Wildon Wu, Researcher at Primitive Ventures

The financial boundaries between countries appear complex, but when it comes down to personal accounts, it often boils down to just a button.

After June 12, 2026, users in mainland China of the largest brokerages, Futu and Tiger, will find that while their US brokerage accounts still show their holdings and assets, and they can sell and withdraw funds, they can no longer deposit, buy, or increase their positions.

As capital begins to show tendencies to detach from national control, the first restrictions imposed by tightening regulations often limit personal choices and the space for asset allocation.

The recent cleanup of cross-border brokerage operations for US stocks in China recalls the crypto crackdown nearly a decade ago. Both actions have comprehensively tightened financial exposures that have long-term adverse effects on local liquidity, strictly delineating the asset channels available for onshore users to trade.

For many Chinese families, this channel serves not just investment needs. With wage growth slowing and the value of Chinese real estate plummeting, allocating to high-quality global enterprises may be one of the few remaining avenues to change the wealth trajectory of Chinese households over the next twenty years. Now, this path is also beginning to narrow.

The Great Wall of Capital in China

The "Implementation Plan for Comprehensive Rectification of Illegal Cross-Border Securities, Futures, and Fund Operations" jointly issued by the China Securities Regulatory Commission and seven other departments makes it clear: all illegal cross-border investment activities will be shut down within two years, starting immediately with a ban on the opening of any new accounts and inflows of funds, allowing only existing funds to be fully withdrawn within two years. Furthermore, all supporting facilities and services related to cross-border investments, including information exposure on domestic networks, are also completely prohibited.

At the same time, Futu and Tiger were each fined 1.85 billion (270 million USD) and 410 million (60.7 million USD) RMB, with their stock prices plummeting by as much as 45% and 30% in pre-market trading, marking the official end of the era where users in China could freely trade US stocks on the regulatory edge.

In fact, this is not a singular, sudden event; China has been gradually tightening the previously legal channels for RMB outbound investments in recent years, starting from the crackdown on brokerages:

• Nov 2021: The CSRC summoned senior executives of Futu (FUTU) and Tiger (TIGR).
• Dec 2022: Both companies were classified as operating illegally, prohibiting the opening of new mainland accounts.
• May 2023: Apps were removed from mainland app stores.
• May 2026: Formal investigations launched + joint rectification by eight departments.

To maintain the RMB exchange rate and the autonomy of monetary policy, capital controls have long been part of China's strategic framework to counter the hegemony of the US dollar, with restrictions on cross-border investments being just one aspect. The goal of the Beijing authorities is clear: money earned within China should be reinvested in the local economy and cannot flow out indefinitely.

Any financial activity that contradicts national strategy, even involving the best local innovative enterprises, sees the priority of the Beijing authorities always favoring financial stability and onshore monetary power above all else:

• Comprehensive ban on cryptocurrencies: forcing Chinese miners with advanced data center designs and energy integration capabilities to go overseas; forcing the largest global cryptocurrency exchanges to operate abroad.
• Interference in ByteDance's TikTok sale in the US: forcing ByteDance to cut its best assets and indefinitely postpone the parent company's IPO plans.
• Veto of Manus acquisition: forcing Manus to seek support from local Chinese capital and explore the possibility of listing in Hong Kong.

Strict regulations not only limit capital flows but also block the outflow of key resources such as technology, talent, data, and supply chains. Keeping these core elements within the country and supporting local enterprises with domestic funds is essential for enhancing national competitiveness from the ground up.

In the last round of globalization, China could rely on its manufacturing supply chain to stand out; however, in the AI era, China faces not only OpenAI and Anthropic but also tech giants like Nvidia, Microsoft, Amazon, and Alphabet, which have experienced the internet bubble. They not only have decades of technological accumulation but also backings from the vast US capital market, potentially differing by more than two orders of magnitude in their ability to finance and leverage financial instruments compared to Chinese companies. Therefore, keeping liquidity and private capital onshore and concentrating funds to support local tech enterprises is currently a pressing task for China.

The stringent financial rectification efforts, combined with a series of support measures for Hong Kong stocks and A-shares (A-shares) STAR Market, strategically encourage enterprises with core technologies and data sensitivity to prioritize listing on A-shares (A-shares) or Hong Kong rather than issuing ADRs in the US. This has led to Chinese entrepreneurs aligning with Beijing's choice of "rising east and setting west" in capital operations: in 2025, the total IPO amount in Hong Kong stocks reached approximately 285 billion HKD (36 billion USD), regaining the top position globally since 2019, far exceeding Nasdaq's 27.5 billion USD. The proportion of companies listed in both A-shares and Hong Kong stocks continues to rise, accounting for nearly 60% by the first half of this year.

It is evident that the Hong Kong Stock Exchange is being built as a center for Chinese enterprises to attract global liquidity, while firmly holding governance rights in Chinese hands.

Thus, the comprehensive exit of US brokerages is not just about blocking local funds from continuously providing valuation premiums in the US capital market. In light of China's missed opportunities in the AI industry, the strategic significance represented by this step may far exceed all previous capital control measures.

Anxious Chinese Retail Investors

According to the MSCI World Index factsheet at the end of June 2026, the top ten constituent stocks account for 25.74% of the index weight, almost all of which are US technology and AI-related companies. These companies hold ownership of future cash flows in AI computing power, cloud platforms, chips, advertising networks, operating systems, consumer entry points, electric vehicles, and satellite internet, with the global distribution system of productive assets concentrated in a few companies. This extreme concentration leads to a "siphoning effect" of global passive funds. Since passive index funds are strictly allocated based on market capitalization, any new global liquidity (such as pension fund investments, sovereign wealth fund allocations) sees nearly 26 USD out of every 100 USD mechanically flowing into these ten US tech companies. This further inflates their valuation premiums, granting them an almost endless advantage in low-cost financing in the real world to acquire, research, and ultimately lock in the core digital and physical assets of the future.

While a quarter of global economic growth is captured by these companies, ordinary Chinese people have no simple means to grasp this most obvious era of beta.

The industrial distribution of Chinese A-shares presents a completely different picture. Historically, the financial sector (Financials) has long dominated the CSI 300, with its weight often maintained between 20% and 30%. However, by the end of 2025 and the beginning of 2026, the weight of the information technology (Information Technology) sector finally achieved a historic surpass, officially overtaking the financial sector to become the largest industry by weight in A-shares.

Over the past twenty years, the engine of China's economic growth has been "real estate + infrastructure," which requires an enormous expansion of credit. Banks and non-bank financial institutions have become the largest cash flow centers, dominating the index. However, in recent years, the macro structure has undergone fundamental changes, well reflecting the resonance of China's unique national strategic will and structural liquidity guidance:

1. Shift in the credit cycle: With the control of local debt and real estate leverage, the speed of balance sheet expansion in traditional financial sectors has significantly slowed, and valuation centers have shifted downward.
2. Central bank structural liquidity: Over the past year, a large number of structural monetary policy tools (such as re-lending for technological innovation) have been precisely deployed. Liquidity has been directly injected into hard technology, semiconductor domestic substitution, and high-end manufacturing sectors.
3. Capital pricing of "new productive forces": The capital market is re-pricing for "self-controllable" and "technological self-reliance and strength." Companies in fields such as computing power infrastructure, semiconductor equipment, and high-end materials have received extremely high valuation premiums and capital tilt.

This lagging reflection is evident not only in the proportion of industry structure in the index but also in stock market performance. Since the emergence of ChatGPT in 2022, China, as the world's second-largest economy, has seen its stock market growth lag behind the top five economies. Chinese retail investors can only hold onto their limited investment quotas in their accounts, watching themselves being excluded from the new wealth system.

The demand for cross-border investment within China is not merely a so-called "worship of foreign things," but rather a response to the mediocre performance of local tech enterprises and the sharp decline in real estate, with the relative sense of deprivation in wealth pushing retail investors' anxiety to its peak. Tracking overseas market ETFs, this year has even seen a premium of up to 10% in A-shares (A-shares).

From a national perspective, capital controls can prevent domestic liquidity from bolstering foreign enterprises, instead supporting the growth of "local enterprises" and avoiding the AI supply chain from being monopolized by foreign entities, keeping asset pricing power in their own hands; however, for individual investors, it does not matter which country high-quality productive assets come from, as they only care about whether they can purchase these targets.

When the demands of the state and individuals diverge, this gap provides a new opportunity for crypto.

Brokering the unbrokered

Over the past 15 years, the narrative of crypto has been to bank the unbanked: to connect those without bank accounts to payment, savings, lending, and advanced monetary systems. This narrative remains important, but the next frontier opportunity is to enable these unbanked individuals to further enter the distribution system of global core assets.

In the past year, the market value of tokenized stocks has grown by over $1.3 billion. In June 2026, SpaceX drove the monthly trading volume of tokenized stocks to exceed $3.4 billion; the daily trading volume of RWA perpetual contracts on trade.xyz surpassed $6 billion.

Although this volume still has a significant gap compared to the traditional U.S. stock market, it is enough to prove that the liquidity of tokenized assets on the blockchain has begun to become active, accessible to global users, traded around the clock, and continuously priced even after traditional markets close.

Given time, these tokenized assets may also be collateralized, lent, and combined into new asset structures like the native assets of crypto today, growing into an alternative asset distribution layer that provides a new brokerage system for those excluded from traditional finance.

Today, those locked out are retail investors in China; tomorrow, it could be Latin American users without U.S. brokerage accounts, Asian users without accredited investor status, Middle Eastern users restricted by domestic capital controls, or simply a young person who does not want their asset boundaries determined by the local financial system. Therefore, the next big opportunity in crypto may not be to create a faster wallet or a cheaper exchange, but to create new asset entry points, repackaging, pricing, and distributing global productive assets.

Capital Flow in the AI Era

In the AI era, "brokered the unbrokered" is bidirectional.

This also applies to enterprises; those who can lock in future capital investments, scarce physical resources, and market attention globally are more likely to establish a competitive moat ahead of their rivals. U.S. companies have long enjoyed the privilege of being first-class citizens in asset issuance, having access to financing around the world.

Large U.S. tech companies possess balance sheets and credit ratings that surpass those of many sovereign nations. They are leveraging this privilege to act as "macro hedge funds." When the Bank of Japan (BOJ) or other central banks maintain a relatively loose interest rate environment for an extended period, and the cost of dollar funding is high, they engage in corporate-level carry trades, locking borrowing costs at 1% or even lower. The lenders typically include local pension funds, insurance companies, and other institutional investors. The national savings of other countries are directly providing the cheapest ammunition for the expansion of U.S. tech giants.

Since last year, major U.S. cloud service providers have issued a large number of foreign currency bonds. In 2026 alone, Alphabet issued bonds worth 576.5 billion yen ($3.6 billion) in Japan and 3.055 billion Swiss francs ($3.9 billion) in Europe; Amazon also completed a bond transaction of 2.82 billion Swiss francs ($3.6 billion). In just two years, the proportion of foreign debt for these companies has grown from zero to 30%.

However, as the supply chain structure of AI is creating many emerging non-dollar assets, the asset issuance privileges enjoyed solely by U.S. companies may not last much longer.

The importance of semiconductors from South Korea and Taiwan in the global supply chain has become prominent, and the recent listing of Changxin, which received 500 times oversubscription, has also secured a place in the AI supply chain, with many quality enterprises still excluded from the dollar capital market. This is why Changxin has launched on Hyperliquid ahead of schedule, primarily to access global liquidity.

The gap between China and the U.S. in the AI race may be smaller than we think. From the launch of DeepSeek in February last year to the recent impressive Kimi K3, it must be acknowledged that China is quickly catching up with the U.S., not to mention its industrialization lead in the field of humanoid robots. Currently, all eyes are on the big tech in the U.S., as well as the IPOs of OpenAI and Anthropic, but in the future, when DeepSeek and Moonshot land on the A-shares, it may be the U.S. investors who will regret it.

The demand for assets is becoming increasingly globalized, while ownership and issuance rights of assets are constrained by national borders.

This is why "brokered the unbrokered" will be more important than "banked the unbanked" in the next 15 years: the former addresses how individuals can access a robust monetary system; the latter determines who can own future low-cost financing rights and possess advanced productive forces in the future.

In 1914, Ford began implementing an eight-hour workday and a five-day workweek. Almost everything in modern society over the past 100 years has revolved around the institutionalization of work and work ethics. Who you are often equates to what job you do.

A hundred years later, the fourth industrial revolution driven by AI continues to compress the marginal value of intellectual labor, making it increasingly difficult for the majority of intellectual workers' wages to keep pace with asset prices and monetary expansion, especially for those assets that can carry technological, monetary, and monopoly dividends. The right to allocate assets is no longer just a traditional "wealth management issue" but has become a new mechanism for social stratification.

The essence of finance is "selling hope" (finance is in the business of hope). May hope always be present.

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