The popularity of perpetual futures in the crypto space has been undeniable, with trading volumes reaching $90 trillion annually, according to Bank of America estimates. Now, with the Commodity Futures Trading Commission (CFTC) granting approval for regulated perpetual futures in the US, Wall Street is weighing the potential of this product.
Despite its popularity, traditional banks are taking a wait-and-see approach, citing concerns over liquidity, regulatory clarity, and infrastructure. In contrast, proprietary trading firms, market makers, and newer clearing firms are more likely to be the first movers, given their ability to accept operational risk and adapt quickly to changing market conditions.
The potential use cases for perpetual futures extend beyond speculation, with possible applications in managing weekend risk and providing a source of price discovery. However, the lack of depth in the market and regulatory uncertainties may hinder the adoption of this product by larger financial institutions. As the market continues to evolve, industry insiders predict that the demand for perpetual futures will drive investment, but for now, the largest banks are likely to remain cautious and wait for the market to mature.