SGX to launch open-ended Bitcoin futures contracts

Singapore Exchange (SGX) has announced its plans to introduce Bitcoin perpetual futures, a move that showcases the expansion of well-established exchange operators into the cryptocurrency derivative markets. The exchange aims to launch these contracts in the latter half of 2025, focusing predominantly on institutional clients and professional investors while excluding retail customers from trading these instruments.

This strategic decision comes in response to the growing demand for digital assets exposure, driven by US President Donald Trump’s favorable stance on cryptocurrencies. Recent reports indicate that Japan’s Osaka Dojima Exchange, with roots tracing back to the 18th century, is also seeking approval to list Bitcoin futures, highlighting the trend among traditional exchanges venturing into Bitcoin derivatives.

By offering Bitcoin perpetual futures, SGX hopes to establish a connection between the regulated financial markets and the dynamic world of cryptocurrency trading. The exchange believes that this new offering will significantly enhance institutional market access. However, the products are still pending approval from the Monetary Authority of Singapore.

Perpetual futures, characterized by their lack of expiry dates, provide traders with the opportunity to speculate on price movements in an underlying asset without the need to possess the asset itself. SGX is not the only player in the market seeking to introduce these contracts in Singapore, as EDX Markets, based in Hoboken, New Jersey and backed by Citadel Securities, unveiled similar plans in January 2024.

Notably, perpetual contracts are commonly offered by offshore cryptocurrency platforms like Binance Holdings and OKX and were notably part of FTX Co-Founder Sam Bankman-Fried’s former crypto empire. However, engaging in business with such crypto exchanges presents credit risks for counterparties due to the industry’s history of stolen assets and failed exchanges. SGX aims to mitigate these risks by leveraging its “Aa2” credit rating from Moody’s, positioning itself as a trusted alternative for trading crypto futures.

The concept of perpetually rolling futures is already prevalent in commodity markets, as seen in Japan Exchange Group’s “rolling-spot” gold futures, providing investors with exposure to current gold prices without physically receiving gold bars. Perpetual futures contracts were originally developed by BitMEX in 2016, with a mechanism similar to swap contracts, where parties settle payments based on the position’s profitability.

While traditional futures for Bitcoin and Ether, with set expiration dates, are widely available on US exchanges, a shift towards perpetual futures is evident in the industry. In October 2024, Bitnomial, a Chicago-based exchange and clearing house, expressed its intentions to introduce perpetual futures in the US market using a new technology platform called Botanical.