The introduction of perpetual futures in the US has generated significant interest, with Kalshi's launch exceeding $1 billion in trading volume within a week. This product, also known as 'perps,' has become a staple in global crypto trading, with estimated annual volume of $90 trillion.
Unlike traditional futures contracts, perps do not expire, eliminating the need for traders to close or roll positions. Instead, periodic funding payments keep the contract price aligned with the underlying asset. The Commodity Futures Trading Commission (CFTC) has cleared Kalshi and Coinbase to offer regulated perpetual futures in the US.
However, large financial institutions are taking a cautious approach, studying the product rather than preparing major launches. Proprietary trading firms, market makers, and newer clearing firms are more likely to be the first movers. 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.
Despite the potential benefits, the market faces challenges, including regulatory uncertainty and thin weekend liquidity. A competitive debate is emerging, with incumbent exchanges protecting their existing businesses and arguing over the regulation of perpetual contracts. For now, Wall Street's view is cautious, with the largest banks waiting for the rules, liquidity, and infrastructure to mature before committing to the market.