CFTC Chairman Talks Up Perpetual Futures

Perpetual futures, or Perps, have arrived in the US with the first regulated Perp issue by Kalshi, referencing Bitcoin. Expect more to follow

BTCPERP was approved last month by the Commodity Futures Trading Commission (CFTC). While some marketplaces offered a perpetual-like product, and they have been active outside the US, the Kalshi offering gained CFTC approval.

Perpetuals are similar to options but do not have a defined expiration date. These trade mark-to-market and thus expose a holder to unlimited loss, but at the same time, exceptional leverage.

CFTC Chairman Mike Selig spoke about perps on CNBC this week, stating they intend to bring novel trading products to the US markets. Offshore crypto derivatives reportedly trade trillions in value annually.

 

A CFTC No-Action letter posted last Friday allowed existing perpetual-style digital commodity futures contracts to be converted into true digital commodity perpetual futures. Coinbase and Bitnomial were specifically referred to in the letter. Designated Contract Markets (DCMs) may now remove expiration dates from existing contracts.

 

 


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