Regulator to Allow Crypto Derivatives Trading for Professionals

The Securities and Futures Commission, the region’s securities regulator, is planning to allow professional investors to trade crypto derivatives, marking a significant expansion of the region’s virtual asset market offerings. This move is seen as a response to industry stakeholders who have long called for the licensing of crypto derivatives trading.

Crypto derivatives are a considerably larger market than spot trading. According to data from TokenInsight, the crypto derivatives market pushed through $21 trillion in volume for the first quarter of the year, compared to $4.6 trillion in spot volume. This indicates a substantial demand for derivatives products in the crypto space.

The regulatory environment in the region has been evolving to accommodate the growing interest in virtual assets. The legislative council recently passed a bill that would allow for the licensing of stablecoins in the city. This legislation is part of a broader effort to establish a comprehensive regulatory framework for virtual assets, which includes the licensing of stablecoins and the allowance of crypto derivatives trading.

Industry experts have welcomed the move, noting that it fills a critical gap in the region’s regulatory landscape. Jean-David Péquignot, chief commercial officer of Deribit, one of the largest derivatives exchanges, highlighted the importance of crypto derivatives rules earlier this year. He stated that these rules were a missing piece of legislation for the region, which has been actively seeking to position itself as a global hub for virtual asset trading.

The allowance of crypto derivatives trading is expected to attract more professional investors to the region’s market. This move is likely to enhance the region’s competitiveness in the global virtual asset market, as it provides a more comprehensive range of financial products for investors. The regulatory developments in the region are part of a broader trend of increasing acceptance and integration of virtual assets into traditional financial markets.