Crypto News: Perp Futures Alarm Wall Street
Crypto news rarely puts the White House and Wall Street on opposite sides of the same argument, but that is where the Trump administration’s embrace of perpetual futures has landed. Known in the markets as “perps,” these are derivatives that never expire, trade around the clock, and can be bought with borrowed money at many times the size of the cash put down. Now the administration is bringing them inside the American regulatory system, and the executives who run the country’s biggest exchanges are warning that the move introduces serious new risks to a derivatives market worth trillions of dollars.
The warning came in interviews with four executives at established exchanges and other key market participants, reported by Reuters on Monday, November 9. Their concern is about what happens when a fast-moving corner of crypto trading enters the regulated American market under rules written for a different kind of contract — and when trading never stops. The Commodity Futures Trading Commission, the regulator at the center of the dispute, has defended its approach, saying it is important to keep the young market under American oversight to protect investors. The exchanges disagree, and two of them have now taken the regulator to court.
What Perpetual Futures Are — and How Big the Crypto Market Already Is
A perpetual future is a bet on the price of an asset that, unlike an ordinary futures contract, has no expiry date. A traditional futures contract lets two sides lock in a price for a transaction on a set date, and when that date arrives the contract ends. A perpetual future never ends. The holder can keep the position open indefinitely, and the two sides settle the difference between the contract price and the market price through regular funding payments for as long as the position stays open.
The products were pioneered in crypto markets outside the United States, where they became the dominant way to trade digital assets with leverage. They are usually leveraged, sometimes by as much as fifty times the money put down, so a small move in the price of the underlying asset can produce a large gain — or wipe out the trader’s stake entirely. They are also predominantly traded by retail investors, ordinary individuals rather than the large institutions that dominate traditional futures markets.
The scale of the market is hard to ignore. Trading in crypto perpetual futures reached 61.7 trillion dollars in 2025, up 29 percent from 2024, according to data provider CryptoQuant. For years, American regulators kept these products at arm’s length. The Trump administration has reversed course, arguing it is better for the activity to take place inside the American regulatory system than to leave it overseas. The exchanges that have run the American derivatives market for decades say the administration is moving too fast, and with the wrong rulebook.
The CFTC’s May Approval — and the Rush by Kalshi, Coinbase and Robinhood
The turning point came in May, when the Commodity Futures Trading Commission formally approved the first United States-listed crypto perpetual futures. On May 29, 2026, the commission approved a bitcoin perpetual contract submitted by KalshiEX, the exchange arm of the prediction-market company Kalshi. The commission’s chairman, Michael Selig, described the decision as charting a path for one of the most liquid parts of the crypto asset markets to exist inside the American regulatory framework. The commission applied its existing futures framework to the contract.
The market response was immediate. Kalshi, Coinbase, and Robinhood were among the financial technology firms that moved into the new market, and more followed. For the upstart platforms, the decision was a long-awaited opening. For the established exchanges, it was a shock.
Selig has said it is important to maintain American oversight of the young market to protect American investors, and the platforms argue that without a US framework the market will keep flourishing overseas. Andy Ross, Kalshi’s head of institutional business, put it this way: it is better for those products to trade transparently inside the American regulatory perimeter than for that activity to remain offshore.
Why Wall Street Says Perps Are Swaps, Not Futures
The heart of the dispute is a single question: is a perpetual future a future, or is it a swap? The answer decides almost everything about how the product is regulated. The big exchanges say it is a swap, and they say the CFTC got the classification wrong when it approved the products as futures. Treating perps as futures, the exchanges argue, gives retail investors access to the products under a regulatory regime that provides insufficient safeguards against leverage and counterparty risk.
The exchanges’ reasoning rests on how the contracts actually work. Traditional futures let counterparties lock in a transaction price for a later date. Swaps involve counterparties periodically exchanging cash flows or liabilities based on a benchmark. Because perpetual futures do not expire and involve ongoing funding payments between counterparties, the exchanges say, they meet the definition of a swap set out in the Dodd-Frank Act of 2010, the law passed after the financial crisis to tighten the rules on derivatives. The CFTC has taken the opposite view, saying that perpetual futures have futures-like features and that their funding mechanism is a substitute for expiration.
The argument has already reached the courts. CME Group is suing the CFTC to overturn the May decision, arguing that the regulator wrongly classified perpetual futures as futures, creating unfair competition and downplaying their risks. Terry Duffy, CME’s chief executive, was blunt about the damage he sees in the ambiguity. “I think they’ve muddied the waters here significantly,” Duffy said. “Anytime you have ambiguity in markets … that could hurt the business.” The CFTC declined to comment on the concerns raised in the Reuters interviews.
CME filed its lawsuit on June 18, 2026, and the litigation remains pending. Its outcome will decide whether the commission can go on regulating perpetuals as futures or must treat them as swaps instead. Rob Hocking, the global head of derivatives at Cboe, another major exchange operator, captured the industry’s frustration. “The industry is at an inflection point where product classification risks becoming a competitive tool,” Hocking said. The executives stressed that their chief concern is not competition itself — they do not view perps as a serious threat to their predominantly institutional businesses — but the regulatory standard. If a product that behaves like a swap is regulated like a future, the safeguards are set at the wrong level from the start, and the gap only becomes visible when markets are under stress.
The 24/7 Trading Risk That Worries Wall Street Most
Beyond the classification fight, the executives raised a second concern that may matter even more in practice: perpetual futures trade continuously, around the clock. Traditional American markets close for the night and the weekend, giving clearing houses, brokers, and traders time to settle trades and meet margin calls during banking hours. Perpetual futures never close, which means exchanges, clearing houses, brokers, and traders must manage positions and meet margin calls at all hours, including times when the banking system is effectively shut.
That may work in smaller, pre-funded crypto markets, the executives said, but it becomes far more complex in larger markets where participants must move large amounts of cash and collateral outside banking hours. Thomas Restout, the chief executive of B2C2, an institutional crypto market maker, put the problem plainly. “The traditional financial market infrastructure in the US is not yet fully equipped for true 24/7 markets,” Restout said.
The mechanics of leverage make the round-the-clock risk sharper. Futures-style margin requirements may be inadequate for products that behave more like swaps, the executives said, increasing counterparty and liquidity risks during periods of intense volatility. Mechanisms that automatically liquidate traders’ positions when their margin falls below the required level could amplify such stress, some said. Last year, such mechanisms triggered the biggest ever liquidation of bitcoin positions, amplifying the selloff as forced sales pushed prices down and triggered further liquidations in turn. The CFTC has called for enhanced customer disclosures about auto-liquidation features during extended trading hours, but the executives argue disclosures are not safeguards. Their broader concern is that improperly regulated perpetual futures and twenty-four-hour trading could disrupt market structure and erode the risk-management safeguards strengthened after the 2007 to 2009 financial crisis.
Single-Stock Perps and the Second Lawsuit
Just as the first legal fight was settling into its slow course through the courts, the CFTC widened the opening. Last week, the regulator also approved single-stock equity perpetual futures — perpetual contracts tied to the shares of individual companies rather than to cryptocurrencies. On November 3, 2026, Chairman Selig announced that perpetual futures on individual equity securities could begin trading for the first time on American exchanges registered with both the CFTC and the Securities and Exchange Commission. The commission let the filings become deemed approved under its Regulation 40.3 after the forty-five-day review period ran out; Kalshi, Coinbase Derivatives, and Bitnomial had filed on September 18.
The reaction was swift. The same day, a group representing Cboe Global Markets and Citadel Securities sued to reverse the equity perpetual approval on the same grounds as the CME case. The group, the Capital Markets Alliance, filed in federal court in New York, arguing the products are security-based swaps under the SEC’s sole jurisdiction.
What Happens Next: The Courts, Congress and the New Democratic Majority
The standoff over market risks could grow larger next year. Democrats, propelled by the midterm elections that handed them control of Congress, are likely to square off against President Donald Trump and step up oversight of the young industries the administration has championed.
The courts will move first. The CME case over crypto perpetuals is pending in federal court in Washington, where the judge must decide both whether the exchange has standing to sue and whether the CFTC’s classification of the products can stand. The Capital Markets Alliance case over single-stock perpetuals is pending in New York, where the question is whether the products belong to the SEC as security-based swaps rather than to the CFTC as security futures. Until there is a resolution, the market will operate under a cloud of legal uncertainty — the very ambiguity that Terry Duffy warned could hurt the business.
Congress will add its own pressure. The new Democratic majority takes office in January, and its members have already signaled that oversight of the administration’s crypto and prediction-market policies will be a priority. That could mean hearings in which the CFTC chairman is asked to defend the May approval and the November equity decision. None of that will happen quickly, and the administration is unlikely to retreat from a policy it has embraced as part of its broader support for crypto.
For investors, the practical question is simpler and more immediate. Perpetual futures are now available in the United States, offered by some of the best-known names in crypto and financial technology, and more products — including contracts on individual stocks — are on the way. The executives who spoke to Reuters are not asking for the products to be banned. They are asking for them to be regulated as what they believe they are — swaps, with the tougher margin, capital, and reporting requirements that come with that label — and for the market to have time to build the infrastructure that twenty-four-hour trading demands.
*Source: Reuters*