The highly anticipated arrival of perpetual futures in the US market is underway, with trading volumes exceeding $1 billion within a week of launch. These contracts, also known as 'perps', have become a staple in global crypto trading, with estimated annual volumes of $90 trillion. Unlike traditional futures contracts, perps do not expire and require periodic funding payments to maintain the contract's price close to the underlying asset.
While US regulators have given the green light for markets to operate onshore, large financial institutions are adopting a wait-and-see approach, citing the need for clearer regulatory guidelines, stable infrastructure, and sufficient liquidity. In contrast, proprietary trading firms and market makers are poised to be the first movers, leveraging their ability to trade on their own capital and accept operational risks. The potential use cases for perps extend beyond speculation, with possible applications in managing weekend risk and providing a source of price discovery. However, industry insiders caution that the demand must be sustained to justify the commitment of capital, and that regulatory debates and competitive disputes are likely to shape the future of perps in traditional markets.