The highly anticipated perpetual futures, a staple in the crypto trading world, have officially landed in the US, with trading volumes reaching $1 billion within a week of launch. These contracts, also known as perps, differ from traditional futures in that they do not expire, eliminating the need for traders to close or roll over positions. Instead, periodic funding payments help maintain the contract's price close to the underlying asset. With an estimated annual volume of $90 trillion, according to Bank of America, perpetual futures have become a core component of global crypto trading.
Following regulatory approval from the Commodity Futures Trading Commission (CFTC), exchanges such as Kalshi and Coinbase have been cleared to offer these contracts. However, large financial institutions are adopting a wait-and-see approach, studying the product rather than preparing for major launches. Proprietary trading firms, market makers, and newer clearing firms are more likely to be the first movers, as they have more freedom to test new venues and accept operational risk.
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. Despite the cautious approach from big banks, the demand for perpetual futures is expected to drive growth, with industry insiders noting that firms won't commit capital until customer activity justifies it.
Regulatory debates and competitive disputes are also emerging, with questions surrounding the treatment of perpetual contracts as futures or swaps, and incumbent exchanges protecting their existing businesses. For now, Wall Street's view is cautious, with the largest banks waiting for the rules, liquidity, and infrastructure to catch up.