Crypto Market News – Hong Kong Eyes $70T Market with New Crypto Derivatives Rules

Crypto Market News – Hong Kong’s $21 Trillion Crypto Derivatives Push Signals Institutional Shift

Crypto Market News – Hong Kong’s financial watchdog is taking a major step toward becoming a global digital asset hub by moving to legalize crypto derivatives trading for professional investors, according to a June report from China Daily.

The Securities and Futures Commission (SFC)—the regulator overseeing financial markets in the city—announced its intention to allow derivatives tied to cryptocurrencies, including futures and options, as part of a broader plan to deepen the city’s virtual asset ecosystem.

Enhancing Liquidity and Hedging Tools for Professionals

The SFC emphasized that its top priorities remain risk management, market transparency, and secure execution. By introducing regulated crypto derivatives, the commission aims to support hedging and leverage strategies for experienced investors, while also boosting liquidity in the underlying spot markets.

“Legalizing crypto derivatives will allow institutional players to manage portfolio risks more efficiently,” the SFC noted, adding that these instruments will be subject to stringent regulatory oversight.

According to TokenInsight, the crypto derivatives market vastly outpaces the spot market in trading volume. In Q1 2025 alone, derivatives trading hit US$21 trillion, compared to just US$4.6 trillion in the spot market. Overall, the crypto sector saw trading volumes exceed US$70 trillion in 2024, highlighting the dominance and scale of derivatives in digital asset markets.

Part of a Broader Virtual Asset Expansion Strategy

The crypto derivatives plan is just one piece of the SFC’s wider initiative to modernize and expand Hong Kong’s crypto infrastructure. Earlier this year, the SFC allowed crypto staking services and granted licenses to two platforms, signaling a growing openness to innovative crypto offerings.

In December 2024, the city also approved crypto exchange-traded funds (ETFs), a milestone moment for the region. However, compared to the United States, investor demand for Hong Kong-listed crypto ETFs has remained modest.

Christopher Hui, Secretary for Financial Services and the Treasury, commented:
“These products have broadened the product diversity of the Hong Kong market, further enhancing Hong Kong’s position as Asia’s leading ETF hub.”

Hong Kong’s Bid for Crypto Dominance in Asia

With this move, Hong Kong is accelerating its bid to become Asia’s leading crypto hub, offering a clear regulatory path in contrast to the fragmented or hostile approaches seen in other jurisdictions.

To support this vision, the SFC has also overhauled its licensing process for crypto exchanges. The previous two-step review model has been replaced with a streamlined, single-phase external evaluation, aimed at improving speed and efficiency without compromising investor protection.

By legalizing crypto derivatives for professional investors, Hong Kong is not only expanding its crypto market offerings but also sending a clear signal of its ambition to become a global leader in digital finance. As the regulatory environment continues to evolve, the city’s proactive stance could make it a magnet for institutional capital and innovation in the crypto space.

Hong Kong Advances Crypto Finance with Legalization of Derivatives Trading for Professionals

Hong Kong’s Securities and Futures Commission (SFC) is set to legalize crypto derivatives trading for professional investors as part of its broader strategy to expand virtual asset offerings, enhance market liquidity, support sophisticated trading strategies such as hedging and leverage, and position the city as a leading global center for regulated digital finance; this move follows the launch of crypto ETF trading and staking services, and comes amid rising institutional interest and over $21 trillion in crypto derivatives traded in Q1 2025 alone.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.