Perpetual Futures: Move Fast, Break Markets

Last Friday, while Kalshi premiered a sleek and stylized new promotional video for the launch of “perpetual futures,” CFTC Chair Mike Selig published an editorial to tout his actions to enable the product. It’s getting harder and harder to tell the difference between prediction market platforms hyping their products and regulators whose job it is to protect investors and the broader economy.

But while prediction markets cheerleaders were celebrating, fewer people were scrutinizing the conveyor belt of regulatory approvals the agency used to greenlight these novel and risky products.

This is timely because Congress is looking to export the CFTC’s permissive, fast-track framework for approving new products to the securities market. Pending legislation would remove certain assets from the definition of a “security”—and the more stringent SEC regime governing how products get into the hands of investors—and airdrop those assets into a much lighter-touch CFTC process.

The CFTC’s approval of perpetual futures provides an important cautionary tale: a feeble process collided with regulatory capture to enable the introduction of exotic financial products with little concern for public feedback on risks or fair competition.

Background on Perpetual Futures

Unlike traditional futures with a fixed contract expiration date (say, 30 days) at which point either cash or physical commodities change hands, perpetual futures do not have a date upon which they expire. Instead, traders make bets that the price of an underlying crypto asset like Bitcoin will rise or fall, with traders then providing recurring payments to each other as the price of the underlying crypto goes up and down. That continues until the trade is canceled, or one of the bettors doesn’t have enough in their account to cover what they owe to the other trader. These trades are usually made with leverage or a small down payment that allows a trader to bet more than they put down. Offshore platforms currently offer up to 50-to-1 leverage in perpetual futures, meaning that for every $1 deposited with the platform, a trader can make a $50 bet in crypto markets. According to CFTC rules, leverage limits in the U.S. won’t be restricted to a numerical cap but are “set pursuant to a platform’s risk management framework.”

These products are further complicated by the fact that perpetual futures platforms operate 24/7, including when traditional payment systems are closed. Because crypto prices can be volatile, bettors may have to post drastic funding payments to keep their trades open. Without a sufficient deposit, when crypto prices move, traders’ positions could be forcibly closed, locking in their losses and potentially exacerbating market-wide volatility. Likewise, the exchanges that offer these products do so through gamified user interfaces and mobile phone-based apps designed to lure customers in and to encourage excessive trading.

The global perpetual futures market is huge; one estimate places it as a $90 trillion market. Other estimates have suggested the market is up to three times the size of the market for “spot” crypto assets (i.e., purchasing Bitcoin directly). In other words, the CFTC approving perpetual futures on crypto products in America is likely to have a significant impact.

The Road to Approval for Perpetual Futures

In April 2025, the CFTC requested feedback from the public on two issues: 1) the “use cases, challenges, and opportunities” for perpetual futures; and 2) how rules should adjust for products that trade 24 hours a day, 7 days a week. Commenters submitted over 150 letters on the first proposal and over 60 on the second.

Commenters, including Better Markets, raised a host of issues with the CFTC about the launch of these products on a 24/7 basis, including how allowable leverage for traders would be determined, how clearinghouses (who sit in between buyers and sellers in the market to manage risk) would handle round-the-clock potential strains, and how the CFTC would counter the heightened risk for market manipulation, especially during times of day when trading volumes are thinner. Beyond public interest organizations, financial firms themselves raised alarm about the potential vulnerabilities in these markets, and agricultural producers voice concern about their ability to manage risks in traditional markets if the CFTC introduced these products. Given the complexity of these issues, commenters also called upon the CFTC to create rules for these new markets through notice and comment rulemaking under the Administrative Procedure Act (APA), rather than ad hoc individual product approvals.

Lightning-Fast Approval

The CFTC sat on these public comments for the last year. Then suddenly, on May 29, 2026, the CFTC approved Kalshi and Coinbase’s requests submitted to the agency just one day earlier to make perpetual futures on crypto assets available to trade. Looking to the CFTC’s website, little information was shared about how these products would work in practice, consistent with the concerns raised during the 2025 comment period. The CFTC only published a short “policy statement” noting that these new products, in their view, didn’t require a market-wide rulemaking according to the APA and that the agency is allowing firms to proceed based only on the brief, vague approval orders.

Broken By Design: the CFTC’s Approval Process

The CFTC’s approval of two firms’ perpetual futures products raises a host of questions about good government and investor protection. How did the firms get products cleared by the agency just one day after they submitted a request? Why were these firms permitted to launch perpetual futures first? Is it because they were the first to request it from the agency, or are there some other factors at play? Additionally, the CFTC didn’t address the myriad comments asking for protections like hard leverage limits or guards to ensure that clearinghouse resiliency in the face of volatile crypto markets. In fact, the agency sidestepped the APA entirely, arguing that one-off product approvals don’t require addressing public feedback. Instead, the agency—in their view—can bilaterally negotiate product parameters with individual companies whose lawyers approach CFTC leadership.

The agency likewise dodged providing a legal rationale for the categorization of the products themselves. The fact that perpetual futures are characterized as “futures” is by no means an undisputed legal fact. Instead, perpetual futures can bear a close resemblance to “swaps”—another product overseen by the CFTC that comes with a different and more stringent regulatory regime for platforms offering the product. Firms that are “swap dealers” need to register with the Commission and comply with a different set of legal requirements.

While approved platforms cautioned in their product launches that they have no intention of providing perpetual-style, 24/7 trading on traditional agricultural commodity futures, that promise is by no means enforceable. The platforms, likely at the CFTC’s behest, demurred from offering those products because of fierce resistance from the farming, ranching, and producing communities that don’t want the volatility or overnight risk of these new types of derivatives. But because the CFTC approved crypto products with no market-wide rules or rationales, Kalshi and Coinbase’s business decisions could be revisited at any time, and the agency would likely have little recourse to contest expansions to traditional futures markets, like those for oil and gas.

Takeaway

The crypto and prediction markets industries like to “move fast and break things,” as the old tech sector adage goes. But typically—and purposefully—Congress and regulators have put speed bumps in place to ensure appropriate protections for the investing public and competitive fairness for firms having the opportunity to bring a product to market. Instead, the CFTC’s approval process,a vestige of the relatively sleepy and vanilla market for agricultural futures, is now being exported to complex, leveraged and volatile crypto futures. And if policymakers on the Hill are successful, it will be copied and pasted to even larger markets.