The recent introduction of perpetual futures contracts linked to cryptocurrencies in the United States has disrupted traditional derivative markets and prompted legal and regulatory confrontations. These contracts, which never expire and allow traders to use significant leverage, were approved last month by the Commodity Futures Trading Commission (CFTC), marking a notable shift in the U.S. derivatives landscape.

The CFTC authorized prediction-markets platform Kalshi to list perpetual futures, commonly known as "perps," alongside granting U.S. customers of Coinbase Global access to its global perpetual contracts. This move was accompanied by a regulatory framework designed to enable registered U.S. platforms to offer such products. Since their debut, Kalshi's perpetual futures tied to cryptocurrencies have quickly amassed over $8.5 billion in trading volume, signaling strong market demand.

However, the rise of perps has exerted downward pressure on shares of established exchange operators that specialize in traditional derivatives such as interest-rate swaps, crude oil futures, and stock index contracts. Since the CFTC’s approval, shares of CME Group have declined by 12%, Cboe Global Markets by 26%, Intercontinental Exchange by 11%, and Nasdaq by 9%.

While proponents argue that perpetual futures fulfill a distinct role compared to conventional futures and options, industry skeptics caution about the heightened risks they entail. Perpetual futures incorporate “funding rates,” periodic payments made between traders to keep contract prices in line with underlying assets. Additionally, the leverage embedded in these contracts can exacerbate losses during volatile periods. Unlike traditional margin calls, positions in perpetual futures are subject to automatic liquidation when market values drop sharply. This "autoliquidation" mechanism is intended to protect platform finances but can precipitate abrupt market swings. A notable example cited involved some $19 billion in leveraged positions wiped out following President Donald Trump’s 2019 announcement of tariffs on China.

CME Group’s CEO Terry Duffy has publicly opposed the introduction of perpetual futures in the U.S., expressing concern over high leverage levels—sometimes exceeding 100 times exposure in offshore versions—that can jeopardize inexperienced traders. “I don’t like to see people that don’t understand products to potentially get blown out of a contract that they shouldn’t be in the first place,” Duffy said at a recent industry conference.

Reflecting these tensions, CME has filed a lawsuit against the CFTC challenging its approval of perps for Kalshi, alleging the move violates federal law and harms competition. Kalshi, Coinbase, and the CFTC have dismissed the lawsuit as an attempt to stifle market competition.

Kalshi CEO Tarek Mansour defended the product, noting that the platform offers leverage at levels comparable to traditional futures, typically up to six times, and argued perpetual futures do not carry greater risks. He emphasized as a key benefit that perps do not expire, avoiding certain costs associated with contract rollovers. “The demand is abundantly clear,” Mansour said. “The incumbents don’t like them because now there’s competition.”

Coinbase, which has been providing similar contracts domestically since July 2025, recently announced plans to launch perpetual futures tied to stock indexes focused on artificial intelligence, China, defense, and the top 100 Nasdaq-listed companies, with leverage up to 20 times. The company reported over $21 billion in notional volume in these contracts to date. According to John D’Agostino, head of strategy at Coinbase’s institutional business, the distinctions between “perp-style” contracts and perps are minimal, and concerns raised now largely reflect the growing popularity and market attention the products are attracting.

Perpetual futures first gained broader notice when traders on decentralized crypto exchange Hyperliquid used their continuous availability to speculate on oil prices during geopolitical events, including the Iran war, when traditional markets were closed. Although Hyperliquid is inaccessible to U.S. residents, some traders have circumvented restrictions using virtual private networks.

As perpetual futures gain a foothold in the U.S., the market grapples with balancing innovation, competition, and risk management amid evolving regulatory scrutiny.