- As per the SFC, legalizing crypto derivatives will help boost liquidity in the essential spot crypto market.
- The SFC has also come up with a streamlined licensing rule for crypto platforms in the region.
The financial markets regulator of Hong Kong has planned to permit derivatives trading for professional investors. The step has been taken to expand product offerings in the asset class and boost the global competitiveness of the city.
The Securities and Futures Commission (SFC) has so far mentioned that its main concern revolves around risk management. The other concerns mention ensuring that the trades are accomplished in a set order and are transparent and secure.
As per the SFC, legalizing crypto derivatives will help boost liquidity in the essential spot crypto market and back professional investors to hedge and leverage strategies. The crypto derivatives market is comparatively bigger than the spot market in terms of size.
The SFC further quoted that the annual trading volumes of the crypto market surpassed US$70 trillion last year. A cryptoassets rating report provider, TokenInsight, revealed that the crypto derivatives trading volume touched US$21 trillion in the first three months of this year.
On the other hand, the spot market dealt with just US$4.6 trillion. Legalizing crypto derivatives is a wider plan of the SFC to expand the range of products and services around digital assets, revealed at the beginning of 2025.
The Emerging Crypto Hub
The SFC has so far allowed crypto staking services and permitted two platforms to offer them. Hong Kong is added to the list of financial powerhouses of Asia, and it is actively working to emerge as a crypto hub in the area, supported by a clear regulatory framework.
The authority permitted the trading of crypto exchange-traded funds (ETFs) towards the end of December. However, the demand for these funds is still average compared to those having a spot in the US.
The Secretary for Financial Services and the Treasury of Hong Kong, Christopher Hui, mentioned that these products have widened the product diversity of the Hong Kong market. Also, it has boosted the position of Hong Kong leading ETF market.
At the same time, the SFC has also come up with a streamlined licensing rule for crypto platforms in the region. The new substructure alters the last two phases of the assessment process with a single, comprehensive external evaluation.
Highlighted Crypto News Today:
Webus Files with SEC to Launch $300M XRP Treasury
