Crypto Exchanges Launch CXMT Perpetual Futures, Opening a Back Door to China AI Bets

Global investors are getting a new way to bet on Chinese artificial intelligence companies listed on mainland exchanges while sidestepping Beijing’s restrictions on foreign stock investment. Cryptocurrency exchanges and decentralized finance platforms are rolling out products tied to shares of Chinese semiconductor and AI companies.

TradeXYZ, Gate.com and other crypto trading platforms recently launched perpetual futures linked to the share price of ChangXin Memory Technologies, or CXMT, China’s largest DRAM maker, the Financial Times reported on July 28. CoinGlass data show trading volume in CXMT futures reached $19 million on July 26, a day before the company’s July 27 listing.

China tightly restricts foreign investment in domestic stocks. Overseas investors must qualify under the Qualified Foreign Institutional Investor, or QFII, program, which limits both eligible securities and investment quotas. On the Shanghai Stock Exchange’s STAR Market, where CXMT is listed, retail investors must hold more than 500,000 yuan in financial assets and have at least two years of investing experience.

Those rules do not apply to futures products offered by crypto firms. Investors can post stablecoins as collateral on the platforms and take long positions if they expect CXMT to rise or short positions if they expect the stock to fall.

Unlike standard futures contracts, the product is perpetual and has no expiration date. Investors can keep positions open as long as they maintain margin. That simple structure has helped expand its use beyond crypto in recent months to stocks and other financial assets. Some crypto-based products also track the valuations of high-profile private companies, including OpenAI.

Buying those products does not mean investors actually own the underlying shares. Their names do not appear on the shareholder register, and they do not receive shareholder rights. The trade is closer to betting on swings in CXMT’s price. Andy Lyu, chief analyst at HTX Research, said it is difficult to clearly classify the product as either a beneficial interest through custody or a synthetic derivative, adding that it more closely resembles leveraged speculative trading.

Because of those risks, the Monetary Authority of Singapore placed Hyperliquid, a platform offering CXMT futures, on its investor alert list last month. The designation is used for entities that could be mistaken for licensed financial firms. Rishi Ramchandani, head of trading at digital asset firm Auros, said regulators will struggle to control products traded outside their jurisdictions.

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