The highly popular perpetual futures trading product, with an estimated annual volume of $90 trillion, is now entering the US market. Following the Commodity Futures Trading Commission's approval, companies like Kalshi and Coinbase are set to offer these contracts. Unlike traditional futures, perpetual futures do not expire and require periodic funding payments to maintain the contract price.
This product has become a staple in global crypto trading. However, large financial institutions are hesitant to adopt it due to stricter capital rules and reputational risk. Instead, proprietary trading firms and market makers are more likely to be the first movers.
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. Nevertheless, the lack of depth and regulatory uncertainty are significant challenges that need to be addressed before these contracts can gain widespread acceptance.