Bitcoin Updates: SGX Addresses Offshore Perp Shortfall as Bitcoin Decline Increases Demand for Hedging

SGX Introduces Perpetual Futures for Bitcoin and Ethereum

The Singapore Exchange (SGX) has taken a significant step in bridging digital assets with traditional finance by launching perpetual futures contracts for Bitcoin and Ethereum. Announced earlier in the year and officially rolled out on November 24, this initiative places SGX among the first regulated exchanges worldwide to offer these crypto derivatives. The move responds to increasing institutional interest in gaining regulated exposure to cryptocurrencies.

Perpetual futures, often called "perps," have become a dominant force in crypto trading, with daily average volumes surpassing $187 billion in 2025—much of this activity originating from Asia. Unlike standard futures, perps do not have expiration dates, enabling traders to maintain positions indefinitely. This feature aligns well with the round-the-clock nature of cryptocurrency markets and eliminates the need for physical settlement.

How Perpetual Futures Work

Perpetual futures differ from traditional contracts by allowing continuous trading without expiry. Their pricing mechanism relies on a funding rate system, where periodic payments between buyers and sellers help keep contract prices in line with the spot market. This system acts as a corrective force—when prices diverge, funding costs rise, encouraging traders to restore balance.

• Perps accounted for 90% of crypto trading volume in 2024, with Bitcoin perps alone averaging $57.7 billion daily—three times the spot market's volume.
• The absence of expiry dates and physical delivery requirements makes perps especially suitable for digital assets.

Trading Structure and Market Impact

SGX's perpetual futures will be available for trading 22.5 hours a day, five days a week, reflecting the continuous nature of crypto markets. Unlike commodities that require physical delivery at contract expiration, perps avoid rollover costs and fixed settlement dates. This flexibility has made them a preferred instrument for hedging and arbitrage among crypto traders.

According to Hassan Ahmed, head of Coinbase Singapore, these contracts empower institutions to better manage risk, particularly during periods of heightened market volatility. He also noted that launching perps during a downturn in Bitcoin prices could highlight their value as risk management tools rather than just speculative products.

Industry Trends and Expansion

SGX's introduction of perps aligns with a broader movement among global exchanges. In the United States, the Chicago Mercantile Exchange (CME) and Cboe Global Markets are preparing similar offerings, while Japan's Osaka Dojima Exchange is exploring Bitcoin futures. Cboe's recent stock performance, which outpaced its peers, reflects growing investor confidence in the expansion of derivatives markets. Meanwhile, Coinbase Ventures has signaled plans to extend perps to real-world assets such as commodities and economic data by 2026, indicating a future where these instruments go beyond crypto.

Regulatory Safeguards and Investor Protection

Despite the enthusiasm, regulatory authorities remain cautious. SGX's perpetual futures are restricted to institutional, accredited, and expert investors, as the Monetary Authority of Singapore (MAS) continues to warn about the risks of crypto trading for retail participants. Ahmed emphasized the importance of robust risk management, as leverage in perps can magnify both profits and losses. Unlike many offshore platforms that liquidate positions instantly, SGX employs margin calls, giving investors time to adjust and aligning with MAS's focus on investor protection.

Market Timing and Future Outlook

The launch comes as Bitcoin experiences a price correction, erasing gains made in 2025. Ahmed suggests this environment highlights the necessity of hedging tools for institutions wishing to manage their exposure without exiting the crypto space. Ethereum's recent increase in its gas limit to 60 million—a four-year high—demonstrates ongoing improvements in network scalability, which could further boost interest in crypto derivatives. Notably, during a recent period of Federal Reserve rate cuts, Nasdaq 100 companies showed greater volatility than Bitcoin, suggesting that crypto assets are becoming more stable relative to traditional markets.

Looking Ahead

SGX's move may pave the way for wider adoption of crypto derivatives across Asia, where trading volumes are already substantial. The recent launch of perpetual futures for equities by Architect Financial Technologies in October underscores the adaptability of these instruments, hinting at a future where perps span multiple asset classes. For SGX, this development supports its $5 billion Equity Market Development Programme and strengthens its partnership with Nasdaq through a dual-listing bridge, reinforcing Singapore's role as a financial hub. As exchanges worldwide compete for a share of the expanding derivatives market, the balance between innovation, regulation, and risk management will determine the future of perpetual futures in the years ahead.