U.S. crypto perpetual futures trading surges as regulators open market

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US crypto perpetual futures trading

Highlights

U.S. regulators, including the CFTC, now allow Kalshi and Coinbase to offer perpetual crypto futures domestically, marking a significant market shift in 2024.
Kalshi reported $1 billion in trading volume for its perpetual contracts within a week of launch, while total global perps volume soared to $90 trillion last year from $30 trillion in 2023.
Critics warn CFTC's May designation of crypto perps as futures enables lighter regulation and higher retail risk, highlighted by 1.5 million liquidations after Trump’s October 10 China tariff threat caused bitcoin to drop 10 percent.

Regulatory shift drives retail adoption

As reported by Financial Times, U.S. regulators this year allow domestic groups including Kalshi and Coinbase to offer perpetual futures, ending years in which the products are largely associated with offshore crypto exchanges. The Commodity Futures Trading Commission describes the move as a watershed moment for U.S. capital markets, aligning it with the Trump administration's broader push for financial innovation.

Perpetual futures, widely known as perps, let traders take leveraged positions on assets such as bitcoin without an expiry date or physical delivery. Instead, traders bet on whether prices rise or fall, while periodic payments between long and short positions help keep contracts tied to the underlying spot market.

Kalshi says the contracts generate $1 billion in trading volume in less than a week after launch, making them its fastest-growing product on record. Bank of America data cited in the report shows crypto perps trade about $90 trillion in volume last year, up from about $30 trillion in 2023.

Volatility concerns grow for U.S. market

Industry critics say the structure of perpetual futures leaves retail traders exposed because losing positions can be liquidated immediately once they fall below required thresholds. Unlike traditional markets, where margin calls can give investors time to add collateral, perp trading can force rapid position closures that deepen falling markets.

Consumer advocates say the CFTC's May decision to classify crypto perps as futures rather than swaps draws particular concern because futures face lighter regulation, looser margin rules and more favorable tax treatment. CME Group last month sues the CFTC, arguing that chair Michael Selig effectively undoes post-2008 crisis safeguards, while the regulator dismisses the case as frivolous.

Supporters of the products argue that round-the-clock trading provides price discovery when traditional markets are closed, especially over weekends. But recent crypto sell-offs underline the risks, with more than 1.5 million traders liquidated within 24 hours after Donald Trump's October 10 tariff threat on China helped send bitcoin down about 10 percent.

Our earlier coverage of prediction market taxation focused on the growing uncertainty over how U.S. traders should report winnings and losses as platforms like Kalshi expand. We noted that, in the absence of clear IRS guidance, income could be treated as gambling, capital gains, or Section 1256 contract gains—each with materially different tax rates and deduction rules, with Kalshi’s newer perpetual products adding another layer of complexity.

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