Today, cool news arrived from Hong Kong. The local regulator (SFC) has finally given the 'green light' for cryptocurrency margin financing for licensed brokers and introduced a framework for perpetual contracts (perps).
What does this mean in practice?
Margin trading on BTC and ETH: Now licensed brokers can offer leverage against crypto collateral. So far, only 'Bitcoin' and 'Ethereum' are accepted as collateral, but this is already a huge step forward.
Perks for 'pros': The SFC has developed rules for trading perpetual futures. For now, access is only being opened for professional investors, but it is usually just a matter of time before the instruments become more accessible.
Liquidity: The regulator has allowed affiliated structures of platforms to act as market makers. This means that the glasses will be fuller, and slippage will be less.
Why is this important for us?
Hong Kong continues its plan to become the main crypto hub in Asia. While the US is playing in courts, here they are building a clear infrastructure. When licensed brokers with leverage come into play, it is a direct path to the influx of large capital (institutional money).
The market is maturing, and Hong Kong is becoming an increasingly interesting place for capital. We are watching the market's reaction, as such fundamental shifts usually play out over the long term.
What do you think? Will HK become a new power center in this cycle?
