China has banned cryptocurrency five years ago, while its domestic stock offerings remain difficult for many foreign investors to access.
But crypto markets have now found a way to let traders bet on one anyway. Even without buying a single share.
- Trade.xyz, a perpetual-futures venue built on the Hyperliquid blockchain, launched a contract on Wednesday, July 15, tied to the expected share price of ChangXin Memory Technologies, or CXMT.
- CXMT, China's largest maker of DRAM memory chips, priced 6.69 billion shares, equal to 10% of its post-IPO capital, at 8.66 yuan, or about $1.28 each, Reuters reported.
- That gives the company an official IPO valuation of roughly $85.5 billion ahead of its planned Shanghai listing.
But the crypto market had other ideas. Shortly after trading began on Trade.xyz, the CXMT-linked contract climbed to $7.6 by press time, implying a company valuation of about $508.4 billion, nearly six times the official IPO valuation.
A stock market without the stock
The product is a perpetual future, a leveraged derivative that has no expiration date. Traders can bet on whether CXMT's eventual share price will rise or fall.
It's less a back door into China's market than a synthetic market stacked above it, a bet on the expected price of shares that many participants can't directly buy.
- Trade.xyz previously launched similar contracts tied to SpaceX, AI-chip company Cerebras Systems and quantum-computing company Quantinuum.
- "It's purely a speculative machine," Bitwise analyst Ishmael Asad told MarketWatch about one of the venue's earlier pre-IPO products earlier in June.
Hyperliquid-linked projects have already drawn scrutiny from some of the biggest names in U.S. derivatives. The Coinformer reported earlier that CME Group and Intercontinental Exchange had urged Washington to rein in oil-linked perpetuals offered through Hyperliquid front ends.