Perpetual futures, a staple in the crypto trading world, have officially landed in the US, sparking a debate on Wall Street about their potential as a lasting phenomenon or a fleeting retail craze. With Kalshi's perpetual futures reaching $1 billion in trading volume within a week of launch, and Coinbase receiving approval to list regulated perpetual futures, the product is gaining traction. However, big banks are taking a slow approach, citing the need for clearer regulations, mature infrastructure, and sufficient liquidity. Unlike proprietary trading firms, which can trade with more freedom, large financial institutions face stricter capital rules and reputational risks, making them more cautious in their adoption of perpetual futures.
The potential use cases for perpetual futures extend beyond speculation, with possible applications in managing weekend risk and providing a source of price discovery. As the market evolves, a regulatory fight is taking shape, with questions surrounding the treatment of perpetual contracts as futures or swaps, and the potential for disputes between exchanges and incumbent players. For now, Wall Street's approach is cautious, with trading firms, regulators, and exchanges watching the market closely, but the largest banks are unlikely to lead the charge.