Hong Kong’s financial regulator is considering allowing professional investors to trade cryptocurrency derivatives as part of efforts to broaden the asset class’s product offerings and strengthen the city’s global competitiveness.
The Securities and Futures Commission (SFC), which oversees Hong Kong’s financial services sector, emphasized that its top priority remains risk management. It aims to ensure that trading activities are conducted in an orderly, transparent, and secure manner.
According to the regulator, legalizing crypto derivatives would boost liquidity in the underlying spot cryptocurrency market while supporting experienced investors through hedging and leveraged strategies.
The scale of the cryptocurrency derivatives market dwarfs that of the spot market. The SFC noted that annual trading volumes for crypto markets are expected to exceed $70 trillion in 2024. Data from TokenInsight shows that in the first quarter of 2025, crypto derivatives trading volume reached $21 trillion, compared to just $4.6 trillion in spot trading.
This proposal to legalize crypto derivatives trading forms part of a broader plan announced earlier this year to expand the range of virtual asset products and services available in Hong Kong. The regulator has already approved crypto staking services and authorized two platforms to offer such services.
Positioning Hong Kong on the Crypto Map
As one of Asia’s leading financial hubs, Hong Kong is actively positioning itself as a regional center for cryptocurrency, supported by a clear regulatory framework. At the end of last year, the city permitted trading of cryptocurrency exchange-traded funds (ETFs), although demand remains relatively low compared with similar funds listed in the U.S.
Financial Secretary Paul Chan noted, “These products diversify Hong Kong’s market offerings and further reinforce the city’s position as Asia’s leading ETF market.”
Meanwhile, the SFC has introduced a streamlined licensing regime for crypto platforms in Hong Kong. This new framework replaces the previous two-stage evaluation process with a single, comprehensive external assessment.
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