Hong Kong to Allow Crypto Derivatives Trading: A Strategic Leap in Virtual Asset Expansion

Hong Kong’s Push into Crypto Derivatives

Hong Kong is making a significant move to expand its virtual asset market by allowing professional investors to trade crypto derivatives.

Announced by Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, on June 4, 2025, this initiative is part of the city’s broader strategy to establish itself as a global leader in digital assets. The Securities and Futures Commission (SFC) has confirmed plans to prioritize sound risk management, ensuring that all trades are conducted in a secure, transparent, and orderly manner.

The crypto derivatives market is a substantial segment of the digital asset ecosystem. Data from TokenInsight reveals that the derivatives market saw trading volumes of $21 trillion in the first quarter of 2025, significantly outpacing the $4.6 trillion recorded in the spot market. This move is expected to attract institutional investors and major trading platforms, further solidifying Hong Kong's position in the global financial landscape.

Jean-David Péquignot, Chief Commercial Officer of Deribit, one of the largest crypto derivatives exchanges, highlighted the importance of this development earlier this year. He stated, “Hong Kong’s regulatory clarity on derivatives will unlock tremendous potential for institutional players looking to enter the market, and it sets a benchmark for other jurisdictions”.

Advancing Regulatory Frameworks with Stablecoin Licensing

Complementing its foray into crypto derivatives, Hong Kong has also passed the Stablecoin Bill, establishing a robust legal framework for fiat-backed stablecoins. The legislation includes requirements for asset reserve management, anti-money laundering (AML) compliance, and risk management. Only licensed issuers are permitted to sell stablecoins, and retail sales are limited to those issued by licensed entities.

Johnny Ng, a member of Hong Kong's Legislative Council, commented on X, “Hong Kong's stablecoins are backed by fiat currency as the underlying asset, and we welcome global businesses and institutions to apply for issuing stablecoins in Hong Kong.” This regulatory clarity aligns with global standards and enhances Hong Kong's attractiveness to international investors, especially at a time when Singapore, a major blockchain hub in Asia, is tightening its policies.

A Global Perspective: Competing in the Digital Asset Space

Hong Kong’s initiatives come at a time when the global digital asset market is experiencing rapid growth. The city has already introduced Asia’s first virtual asset futures ETFs and spot ETFs, and it continues to optimize its tax framework to attract international players. These efforts are part of a larger strategy to integrate Web3 technologies into traditional finance and to position Hong Kong as a global hub for digital assets.

In contrast, other regions like Singapore have introduced stricter regulations for digital token service providers, potentially driving businesses to more favorable jurisdictions like Hong Kong. This shift underscores Hong Kong’s competitive advantage as it balances innovation with regulatory oversight.

Just a few days ago, on May 28, 2025, the Russian Central Bank announced that it would allow qualified investors to trade crypto derivatives. Hong Kong has now joined the ranks as well — by embracing crypto derivatives and stablecoin licensing, it is not only expanding its financial offerings but also setting a precedent for other global financial hubs to follow.