When the Channel Is Cut, the Real Issue Is Legal Framework
In May 2026, the China Securities Regulatory Commission and several other agencies formally penalized cross-border brokerages including Futu and Tiger Brokers, finding that they had long provided unapproved overseas securities trading services to mainland Chinese residents. Total penalties came to approximately RMB 2.26 billion. Regulators simultaneously placed the platforms into a two-year remediation period, during which mainland investors may only sell and withdraw funds — no new deposits, no stock purchases, no new accounts. After two years, services aimed at mainland clients will exit entirely.
Most people's first reaction was: that's it, we can't buy U.S. stocks anymore.
But the real issue is something else. You believed you were buying American assets and capturing the returns of the American market. In reality, every one of those transactions was completed inside China's legal framework.
Legal framework sounds abstract, but the consequences are concrete. The fundamental reason Futu and Tiger were sanctioned is that you were using a channel inside Chinese regulatory jurisdiction to buy offshore assets. Tighten the regulation, and the channel is cut.
Here is the conclusion first: if you want genuine global asset allocation, you need to understand how assets are held under the U.S. legal framework. It is not enough to park money in a U.S. brokerage account. Your assets need to belong to the American system at the legal level. Only then can you use trusts, invest in private placements, and build family succession plans — the standard tools of global wealth planning.
Because many of the most valuable assets are simply not open, for now, to people inside the Chinese legal framework.
The SpaceX Example: What You Missed Was Not the 20%
People often say they understand this already — SpaceX rose 20% on its first trading day, and mainland and Hong Kong investors were barred from participating in the SpaceX IPO subscription.
But that is not my point. In January 2025, sixteen months earlier, SpaceX was valued at $400 billion. Today it is $2 trillion. That is a 5x difference.
What is a 20% IPO pop next to 5x?
The catch is that the 5x was a private-market return. You had to buy in as a private investor while SpaceX was still private. And private placements carry a hard requirement: you must be a U.S. accredited investor, you must have a U.S. bank account, and you must have a U.S. tax identification number.
In other words, you must be inside the U.S. legal framework. Without it, that 5x will never have anything to do with you.
The 20% in public markets is an opportunity everyone can see. The 5x in private markets belongs only to those eligible to participate.
Step One: A U.S. Bank Account
Entering the U.S. regulatory framework requires two things: an ITIN and a U.S. bank account.
Start with the bank account. There are more than 4,300 FDIC-insured banks in the United States. FDIC insurance covers $250,000 per depositor per account, meaning that if the bank fails, the Federal Deposit Insurance Corporation backstops $250,000 per person per account.
The large banks — JPMorgan Chase, Bank of America, Wells Fargo — set a very high bar for clients without a U.S. address or Social Security number. The process is cumbersome, rejections are common, in-person visits are usually required, and applications frequently stall over incomplete documentation.
Smaller banks, by contrast, are considerably friendlier on account opening. Several banks serve the Chinese community specifically — East West Bank and Cathay Bank among them — where staff speak Chinese and understand the community's circumstances. East West Bank is the largest Asian-American commercial bank in the country, serves Chinese clients specifically, and has a dedicated process for mainland residents.
That said, opening an account online on your own is not easy. During the process the bank will ask for a U.S. address, an ITIN, and documentation of your source of funds. Without knowing the sequence, it is easy to get stuck at one step. This is where a relationship manager who can walk you through the full process matters.
Step Two: Applying for an ITIN
During account opening, the bank will require an ITIN.
ITIN stands for Individual Taxpayer Identification Number. It is issued by the IRS specifically to foreign nationals who do not have a Social Security Number. If you have any form of financial activity in the U.S. — interest on a bank account, rent from a property investment, distributions from a private fund — you owe tax, and the ITIN is your U.S. tax ID.
With an ITIN, you have a recognizable identity within the U.S. legal system. Your investments are protected by U.S. law, and your assets can be legally held, legally transferred, and legally inherited.
It also means you take on a U.S. filing obligation. Income earned in the U.S. must be reported to the IRS annually.
Obtaining an ITIN requires IRS Form W-7 plus a passport as proof of identity. There are two routes.
The first: mail the materials to the IRS yourself, including your original passport or a copy certified by a U.S. embassy, then wait four to eight weeks. The drawback is that your passport is out of your hands for a long stretch, which many people are not comfortable with.
The second: use a CAA, a Certifying Acceptance Agent. This is an IRS-authorized entity that can verify your passport in person, so you do not have to mail the original. Many U.S. accounting firms hold CAA authorization, typically charging $150 to $300. The process is both safer and faster.
What an Account and a Tax ID Unlock: From Treasuries to Private Markets
At the basic level, you can buy Treasuries, stocks, real estate — any American asset, on the same terms and with the same legal protections as any ordinary American.
But the genuinely interesting layer is private placements.
Private investing means buying equity in a company before it goes public. SpaceX is the most famous case, but the market currently holds many unlisted companies valued above $100 billion: Anthropic, OpenAI, Stripe. A certain volume of their private equity circulates in the secondary market every year.
On March 31, 2025, BlackRock CEO Larry Fink wrote in his letter to shareholders that 81% of U.S. companies with revenue above $100 million are still privately held.
The gate to private investing is the accredited investor standard: annual income above $200,000, or net worth above $1 million. Many people assume they do not qualify, when in fact — once domestic and overseas assets are combined — a great many families cleared the bar long ago.
Beyond equity, the other mainstream private channel is real estate.
Here is a comparison most people have never seen. If you buy an investment property in California or Seattle and hold it directly as a rental, annual net yield runs 1% to 3%. A property bought with $1 million in cash produces $10,000 to $30,000 of net rental income a year.
If instead you participate through a real estate private fund, ordinary projects can deliver 10% to 15% annualized, and stronger projects 20% to 30%.
Why the gap? Because a private fund can do far more than an individual landlord: use leverage, execute value-add renovations, diversify across multiple projects, and run operations with a professional team. None of that is available to an individual owner.
The reason I know these numbers so well is that I am a real estate developer myself. The direction I have been focused on recently is modular development.
Modular means the main structure of the home is prefabricated in a factory and assembled on site, like building blocks. Construction cost comes in 30% below conventional building, and the schedule shortens by 80%. Lower cost and faster delivery open up the profit envelope: where conventional construction might yield a 10% margin, modular can reach 100%. In the current market environment, it is the most competitive direction in real estate development. If you want to see how it works in practice, my modular development projects document the full cost structure and project data.
Back to the Original Question
You think what you missed was the 20% on SpaceX's first trading day.
What you actually missed was the chance to buy in at a $400 billion valuation in 2025 and hold it to $2 trillion today.
The real lesson of the Futu and Tiger penalties is not "we can no longer buy U.S. stocks." It is which legal framework your assets sit in. A channel can be cut; a legal identity cannot. An ITIN and a U.S. bank account look like two technical steps, but they are the ticket to participating in the most valuable layer of American assets.
This article is personal experience and general education only. It does not constitute investment, tax or legal advice. Consult qualified professionals regarding your specific situation.
