The popularity of perpetual futures in the crypto space is undeniable, with trading volumes reaching $90 trillion annually, according to Bank of America. These contracts, also known as perps, have been a staple in global crypto trading, allowing investors to trade without expirations or the need to close or roll positions. Recently, the Commodity Futures Trading Commission (CFTC) has cleared the way for regulated perpetual futures to be offered in the US, with Kalshi and Coinbase receiving approval to list these contracts. Despite the excitement, large financial institutions are taking a wait-and-see approach, citing the need for clearer regulations, liquidity, and infrastructure before committing to the market.
In contrast, proprietary trading firms, market makers, and newer clearing firms are more likely to be the first movers, given their ability to trade with their own capital and accept operational risk. The potential use cases for perpetual futures extend beyond speculation, with the possibility of helping traders manage weekend risk and providing a source of price discovery. However, the market's depth and regulatory framework remain key concerns, with the distinction between futures and swaps being a crucial factor in determining 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 catch up before making a significant commitment.