U.S. derivatives market faces risk debate as crypto perpetual futures gain approval

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US crypto perpetual futures debate

Highlights

CFTC approved U.S.-listed crypto perpetual futures in May, enabling firms like Coinbase and Kalshi to enter a $61.7 trillion global perp market projected for 2025.
CME Group and a coalition representing Cboe Global Markets and Citadel Securities sued the CFTC over its classification and approval of perps, citing unfair competition and risk understatement.
Executives warn that applying futures-style margin rules to perps could inadequately address leverage and counterparty risk, potentially heightening liquidity stress and market disruption.

Regulatory approvals intensify classification dispute

As reported by Reuters, the Trump administration's support for bringing offshore-style perpetual futures, or perps, into the U.S. market is drawing warnings from executives at incumbent exchanges, trading firms, asset managers and market-structure providers. Their concern is that round-the-clock products with no expiry date, often used with high leverage, could weaken risk controls built up after the 2007-09 financial crisis.

Perps, pioneered in non-U.S. crypto markets, allow investors to hold positions indefinitely and are mainly traded by retail investors. Crypto perps trading volume reaches $61.7 trillion in 2025, up 29% from 2024, according to CryptoQuant data, with much of the activity concentrated on large Asia-based platforms such as Binance and Hyperliquid.

The U.S. Commodity Futures Trading Commission formally approves U.S.-listed crypto perps in May, opening the way for Kalshi, Coinbase, Robinhood and other financial technology firms to enter the segment. Last week, the regulator also approves single-stock equity perps, while CFTC Chair Michael Selig says U.S. oversight of the young market is important for protecting American investors.

CME Group is suing the CFTC over its May decision, arguing the regulator wrongly classifies perps as futures, creates unfair competition and understates the products' risks. A group representing Cboe Global Markets and Citadel Securities also sues last week to reverse the CFTC's recent equity perp approval on similar grounds.

Market structure concerns spread across Wall Street

Terry Duffy, CME's chief executive, says the regulator's approach creates damaging ambiguity for markets and business planning. The CFTC declines to comment on the concerns raised in the interviews and has previously said CME chooses "lawfare" instead of competing in the new market.

Established exchanges say their main worry is less about direct competitive pressure and more about investor protections. They argue that treating perps as futures gives retail traders access under a regime that may not fully address leverage and counterparty risk, while products with swap-like behavior typically face stricter margin, capital and reporting requirements and are generally less accessible to retail investors.

Executives and derivatives lawyers say futures-style margin rules may prove too light for instruments that can behave more like swaps during sharp volatility. They also warn that automatic liquidation mechanisms, triggered when traders' margin drops below required levels, could intensify liquidity stress and market disruption.

The dispute is also becoming part of a broader political and industry confrontation over crypto and prediction markets. With Democrats taking control of Congress after this week's midterm elections, oversight pressure on the sector is likely to increase next year even as newer platforms push to extend perp products into more asset classes and argue that, without a workable U.S. framework, business will continue flowing overseas.

Our earlier coverage of Hainan Rubber’s proposed subordinated perpetual sustainable securities explained how the refinancing plan relies on a perpetual structure that sits lower in the capital stack and permits coupon deferral. We also noted the key credit considerations around leverage, liquidity, and the role of state-linked support in sustaining the issuer’s access to funding.

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