The highly popular crypto trading product, perpetual futures, has officially landed in the US, with trading volumes reaching $1 billion within a week of launch. This product, also known as 'perps', resembles standard futures contracts but lacks an expiration date, eliminating the need for traders to close or roll positions into new contracts.
Instead, periodic funding payments keep the contract's price aligned with the underlying asset. Perpetual futures have become a staple in global crypto trading, with estimated annual volumes of approximately $90 trillion. Following regulatory approval from the Commodity Futures Trading Commission (CFTC), Kalshi and Coinbase have been cleared to offer these contracts in the US.
However, large financial institutions are adopting a wait-and-see approach, studying the products rather than preparing for major launches. Proprietary trading firms, market makers, and newer clearing firms are more likely to be the first movers, as they have more freedom to test new venues and accept operational risk. The potential use cases for perpetual futures extend beyond speculation, as they could help traders manage weekend risk and provide a source of price discovery. Despite the potential benefits, the lack of depth in the market and regulatory uncertainties are causing institutions to proceed with caution.
A competitive debate is also emerging, with incumbent exchanges challenging the regulatory treatment of perpetual contracts. For now, Wall Street's view is cautious, with the largest banks waiting for the rules, liquidity, and infrastructure to mature before committing to the market.