Perpetual futures, a staple in the crypto trading world, have officially arrived in the US, with Kalshi's contracts reaching $1 billion in trading volume within a week of launch. These contracts, also known as perps, differ from traditional futures in that they do not expire, eliminating the need for traders to close or roll over positions. Instead, periodic funding payments keep the contract's price aligned with the underlying asset. With an estimated annual volume of $90 trillion, according to Bank of America, perps have become a core component of global crypto trading.
Following the Commodity Futures Trading Commission's (CFTC) approval, Coinbase also received the green light to list regulated perpetual futures in the US. However, despite the growing interest, large financial institutions are adopting a wait-and-see approach, focusing on studying the product rather than launching major initiatives. 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 risks.
The potential use cases for perps extend beyond speculation, as they could help traders manage weekend risk and provide a source of price discovery. A liquid 24-hour perpetual market could enable firms to adjust positions as events unfold and use weekend prices to estimate where traditional futures may reopen.
Nevertheless, the demand for perps must be substantial to justify the commitment of capital, and the current lack of depth in the market remains a concern. Regulatory debates are also emerging, with questions surrounding the classification of perpetual contracts as futures or swaps, which affects margin rules and registration duties.
As the market continues to evolve, it is likely that the largest banks will wait for the rules, liquidity, and infrastructure to mature before making significant investments.