Perpetual futures, a staple in the crypto trading world, are now making their way into regulated American markets, leaving Wall Street to ponder whether they are a fleeting trend or a lasting disruptor to traditional futures. The initial numbers are undeniable, with Kalshi's perpetual futures reaching $1 billion in trading volume within a week of launch in June, marking the company's most successful product debut since prediction markets. The exchange has since sought regulatory approval to offer perpetual futures tied to gold and silver, indicating that the product may extend beyond bitcoin and other digital assets.
Perpetual futures, also known as perps, are similar to standard futures contracts but lack an expiration date, eliminating the need for traders to close or roll over positions. Instead, periodic funding payments help maintain the contract's price in relation to the underlying asset.
This product has become a cornerstone of global crypto trading, with Bank of America estimating annual perpetual futures volume at approximately $90 trillion. On May 29, the Commodity Futures Trading Commission (CFTC) granted Kalshi approval to offer the contracts, and Coinbase also received approval to list regulated perpetual futures in the US. However, within Wall Street, interest in perps does not necessarily translate to immediate adoption.
People familiar with the discussions noted that perps are being discussed more frequently, partly due to US regulators allowing offshore markets to move onshore. Nevertheless, most large financial institutions are still studying the products rather than preparing for major launches. The first movers are likely to be proprietary trading firms, market makers, and newer clearing firms.
Unlike large banks, prop shops trade their own capital, giving them more freedom to test new venues, accept operational risk, and withdraw if the economics cease to work. Big banks, on the other hand, face stricter capital rules, client obligations, and reputational risk, making the potential profit in a young market not yet justifiable.
The difference in approach matters because the term 'Wall Street' encompasses several groups moving at different speeds. Individual traders and smaller firms often arrive first, followed by market makers once volume grows, while banks typically require years of data, clear regulatory treatment, and stable infrastructure before committing large sums. The potential use cases for perps extend beyond speculation, as they could help traders manage weekend risk.
Traditional futures markets close for part of the weekend, even though significant events do not. A liquid 24-hour perpetual market could change this, allowing firms to adjust positions as events unfold and use weekend prices to estimate where CME futures may reopen.
Insiders noted that perps could be useful as both a hedge and a source of price discovery. 'The demand has to be there, or the capital won't be,' one industry insider said, arguing that firms won't commit balance sheet until customer activity justifies it. The problem lies in depth, as a contract may trade around the clock, but that does not mean institutions can move large positions without shifting the market.
Weekend liquidity remains thin, and collateral systems do not always move as quickly as the markets they support. A regulatory battle is also taking shape, with one key question being whether some perpetual contracts should be treated as futures or swaps, affecting margin rules, registration duties, and who can provide liquidity. Industry insiders said these legal questions may become more important as exchanges push perps into commodities, equities, and other traditional markets. The debate is also becoming competitive, with CME challenging the CFTC's treatment of Kalshi's bitcoin perpetuals, arguing the contracts should be regulated differently.
Similar disputes could emerge if exchanges seek to expand perpetuals into equities and other asset classes. 'A lot of this stuff... is more commercial than people are going to admit to out loud,' another industry insider said, suggesting some opposition reflects incumbent exchanges protecting existing businesses as much as concerns about market structure.
For now, Wall Street's view is cautious rather than hostile, with trading firms seeing a product they understand, regulators seeing a market moving onshore, and exchanges seeing a chance to capture new volume. However, the largest banks are unlikely to lead, opting to wait for the rules, liquidity, and infrastructure to catch up.