Crypto Exchanges Draw Big Money to CXMT Futures, Offering a Route Around China Curbs

Global investors are finding a new way to gain exposure to Chinese-listed artificial intelligence companies as crypto exchanges and decentralized finance platforms roll out products tied to Chinese semiconductor and AI stocks.

Crypto trading platforms including TradeXYZ and Gate.com have recently launched perpetual futures based on the share price of ChangXin Memory Technologies, or CXMT, China’s largest DRAM maker, the Financial Times reported on July 28. CXMT listed on July 27. Futures trading volume linked to CXMT reached $19 million on July 26, the day before the listing, according to crypto derivatives data provider CoinGlass.

China places tight restrictions on foreign investment in domestic stocks. Overseas investors must qualify under the Qualified Foreign Institutional Investor program, or QFII, and even then face limits on eligible stocks and investment size. Individual investors in the STAR Market, where CXMT is listed, must hold more than 500,000 yuan in financial assets and have at least two years of investing experience.

The futures products offered by crypto platforms are not subject to those rules. Investors can post stablecoins as margin and take long positions if they expect CXMT to rise, or short positions if they expect the stock to fall.

Unlike conventional futures, these contracts do not expire. Investors can keep positions open as long as they maintain margin. The relatively simple structure has helped expand their use beyond crypto to stocks and other financial assets. Similar crypto-based products also track the valuations of high-profile private companies including OpenAI.

Buying those products does not give investors actual ownership of the underlying shares. Their names do not appear on the shareholder register, and they do not receive shareholder rights. The trade is closer to a bet on moves in CXMT’s price. Andy Lyu, chief analyst at HTX Research, said it is hard to determine clearly whether the product represents a beneficial interest through custody or a synthetic derivative. It is more akin to a leveraged directional bet, he added.

Because of those risks, the Monetary Authority of Singapore placed Hyperliquid, a platform offering CXMT futures, on its investor alert list last month. The measure targets firms that could be mistaken for licensed financial companies. Rishi Ramchandani, head of trading at digital-asset firm Auros, said regulators in different countries will find it difficult to control products traded outside their jurisdictions.

Kim Ju-wan, Hankyung.com reporter, kjwan@hankyung.com