China explores AI token futures market amid growing compute demand

China is designing a futures market for AI tokens as the country explores new financial tools linked to the rapidly expanding artificial intelligence sector.

The Shanghai Futures Exchange is in the early stages of designing futures contracts tied to so-called AI tokens, which are the smallest units of information processed by AI models, sources familiar with the matter told Reuters.

The research into product design remains preliminary and is partly driven by the technological rivalry between China and the United States.

As mentioned in the Reuters report, the move comes as major US exchanges, including CME Group and Intercontinental Exchange, prepare to launch GPU compute futures linked to the cost of renting computing power used in artificial intelligence operations.

China takes a different approach from the US exchanges

While the planned US products are focused on computing power costs, the Shanghai exchange’s proposed contracts would instead be tied to AI tokens used in pricing AI services.

Both types of derivatives are aimed at helping companies across the AI supply chain hedge against rising computing costs.

The plan is still subject to change, and it is unclear when the Shanghai Futures Exchange would seek regulatory approval for such products.

China is expected to launch compute futures within the next three to five years, according to a research note issued earlier this month by brokerage Baocheng Futures.

However, the brokerage noted that the fragmented nature of the current market could create challenges for launching such products.

AI seen as strategic growth engine

China has increasingly positioned artificial intelligence as a strategic sector and a major driver of economic growth.

The country is accelerating the development of a spot market for computing power.

The market is backed by data-centre operators, AI model developers, and users of compute power.

Xiao Feng, chairman and chief executive of HashKey Group, said tokens function as the digital fuel or raw material powering AI models because they measure compute consumption.

Official data showed that China’s daily token usage surged 1,000-fold since the start of 2024 to more than 140 trillion by the end of March.

The rapid increase in demand has also intensified discussions around the financialisation of AI-related resources.

Earlier this month, BlackRock Chief Executive Larry Fink said at a conference that rising demand for tokens could create an entirely new asset class centred on futures linked to computing power.

Compute shortages fuel market discussions

China’s AI sector has also faced growing pressure from shortages in computing power.

Many Chinese AI model providers have rationed user access in recent months due to limited computing resources.

Zhang Yunquan, a computing technology researcher at the Chinese Academy of Sciences, proposed the launch of compute futures to China’s parliament in March, according to official media reports.

In December, China’s official commodity index company released a series of indices tracking the country’s computer supply.

These indices could potentially serve as benchmarks for future derivatives contracts.