May 28 (Reuters) – China is designing a futures market for AI tokens, sources familiar with the matter said, as the country potentially takes a different tack to U.S. exchanges developing compute power futures to tap the rapidly growing appetite to hedge AI costs.
The Shanghai Futures Exchange is in the early stages of designing futures contracts for so-called AI tokens – the smallest unit of information processed by AI models, said one of the people familiar with the matter.
The Shanghai exchange’s research on product design for token futures is preliminary and driven partly by the AI rivalry with the U.S., according to the first source.
The move comes as the CME Group and Intercontinental Exchange in the U.S. are preparing to launch GPU compute futures, which are tied to the cost of renting the computing power for AI.
In contrast, the Shanghai exchange’s product would be tied to AI tokens, which are used for pricing AI services.
All of these derivative products are designed for companies all along the AI supply chain to hedge against the cost of computing power.
It’s too early to tell when token futures will be launched and the plan is subject to changes, said another person. It is also not clear when the exchange would seek regulatory approval for token futures.
The Shanghai Futures Exchange, which is a hub for commodity and metals futures trading in the country, and the China Securities Regulatory Commission (CSRC) did not respond to Reuters’ request for comment.
China is expected to debut compute futures in three to five years, brokerage Baocheng Futures said in a research note issued earlier this month, though it noted that the current fragmented market was an obstacle to the plan.
TOKEN FUTURES WOULD CREATE A NEW ASSET CLASS
China sees AI as a strategic sector and engine of growth, and is accelerating the development of a spot market for computing power, backed by data-centre operators and AI models and others who use compute power.
Tokens, which are a measure of compute consumption, function as the “digital fuel” or “raw material” that powers AI models, said Xiao Feng, Chairman and CEO of HashKey Group.
China’s daily token usage has rocketed 1,000-fold since the start of 2024 to more than 140 trillion by the end of March, according to official data.
BlackRock Chief Executive Larry Fink told a conference earlier this month that surging demand for tokens could spawn an entirely new asset class in buying futures of compute.
Meanwhile, computing power shortages have forced many Chinese AI models to ration user access in recent months.
Zhang Yunquan, computing technology researcher at the Chinese Academy of Sciences, in March also proposed the launch of compute futures to China’s parliament, according to official media.
In December, China’s official commodity index company published a series of indices tracking the country’s compute supply – which could serve as underlying benchmarks for futures contracts.
Yilei Shao, dean of the Shanghai AI-Finance School at East China Normal University, said China should launch token futures sooner rather than later, as the derivative is key to the technological contest centered on AI and semiconductors.
It will also play a key role in the financial competition between China and the U.S., she said.
“The United States and China are the only two nations capable of mass-producing artificial intelligence,” she said. “The maxim ‘Whoever masters AI, rules the world’ is hardly an exaggeration.”
(Reporting by Reuters Staff; Editing by Sumeet Chatterjee and Sonali Paul)
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