Perpetual futures for crypto, also called perpetual swaps or perps, are gaining momentum in the United States amid concerns over risk to retail traders.
Head of consumer products of Coinbase, Max Branzburg announced on June 13 that the exchange was planning to launch perps that are compliant with the Commodity Futures Trading Commission (CFTC) for US customers. While BitMEX first launched crypto perps back in 2016, US customers and exchanges haven’t had access to them.
One of the main reasons US financial watchdogs have taken action against exchanges offering perps is the high-risk nature of the contracts.
However, recent changes in guidance among federal regulators after the election of US President Donald Trump could change that.
Retail risk a concern as perpetual futures seek approval
Crypto perpetual futures contracts allow investors to speculate on the future price of cryptocurrencies like Bitcoin (BTC) and Ether (ETH).
Regular futures have an expiration date, but perps — as the name would suggest — can be held in perpetuity.
One of the key concerns about risk surrounds the ability for perp traders to highly leverage their positions, sometimes up to 100 times. These allow traders to hold a much larger position with a small amount of capital. For example, with 10 times leverage, a trader with $1,000 can hold a $10,000 position.
Perps can be an effective hedging tool that allows users the flexibility of entering or exiting a position, not to mention the higher returns thanks to leverage — but they are also risky.
Crypto quant trader and chief strategy officer of crypto exchange Coincall, Fenni Kang wrote, “For the average user, especially those without a solid background in trading or risk management, perps can be a ticking time bomb.”
If a market dips and the price falls below the trader’s maintenance margin, the trader’s position can be quickly liquidated.
Kang told Cointelegraph, “Some traders are not familiar with the concept of margin or risk management. They might overuse the margin, and even if their market view is right, they can be liquidated due to maintenance margin blow-up.”
Even a small price fluctuation could wipe out a trader’s position. A 5% decrease in a 20-times leveraged position would result in liquidation, and the trader would lose their entire base investment.
In 2023, risk concerns led the CFTC to issue an advisory note that companies offering derivatives like perps should expect increased scrutiny. They drew particular emphasis on issues “related to system safeguards, physical settlement procedures, and conflicts of interest.”
Crypto-reporter Veronica Irwin wrote in a June 18 newsletter, “During the [Biden] administration, the CFTC […] doggedly pursued firms supporting perpetual futures.” She noted that the CFTC has taken action against exchanges Kraken, Binance and KuCoin for “substantially similar products” to perpetual futures.
But CFTC guidance seems to be changing.
Regulators take a new look at perpetual futures
Rules for the US crypto industry are changing fast under the Trump administration, with dropped enforcement actions at the Securities and Exchange Commission and a seemingly open attitude at the CFTC toward perpetual swaps.
In March 2025, the CFTC withdrew its aforementioned advisory note to “ensure that it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products.”
Related: Gemini accuses CFTC enforcers of ‘trophy-hunting lawfare’ in 2022
On April 21, the CFTC opened up to public comment regarding perps and derivatives markets. Acting Chair Caroline Pham said, “The CFTC is getting back to basics by requesting public comment on perpetual contracts that have seen significant interest recently from exchanges and market participants.”
As noted by Irwin, just two days later, CFTC-regulated designated contract market maker (DCM) Bitnomial self-certified a legal perpetual futures contract.
Under commodities law, DCMs can self-certify derivative products by filing a prospectus with the CFTC. If the CFTC doesn’t object within a specified period, then the product is approved.
Speaking at the Piper Sandler Global Exchange and Trading Conference, Pham reportedly said, “We’re not waiting for perps to go live, they’ve been live. They’ve been live on Bitnomial […] They worked with the CFTC and our staff for over a year on what was the methodology, what was the pricing, what was the funding.”
Greg Tusar, vice president for product management at Coinbase, said that his firm has been engaging with the commission on a peprtuals-like product. Speaking at a Morgan Stanley conference on June 10, Tusar said the exchange “worked with the CFTC to replicate a lot of those features,” such as a lack of expiry date.
“We have a product design that we’re now close to implementing and we’ll have a date to share shortly,” he said.
The crypto perpetual futures market is huge
Perpetual derivatives represent a sizeable chunk of the crypto market. Adam McCarthy, a research analyst at Kaiko, told Bloomberg in April, “Essentially, the perps market has always been several orders of magnitude larger than the daily spot market […] Perps have really been the heart and soul of the crypto market over the past decade.”
According to data from CoinMarketCap, open interest on perpetuals in the crypto market was $704 billion as of June 20.
Whether US crypto exchanges get the green light piecemeal on a by-product basis or receive clear guardrails from a new, incoming chair, some analysts believe retail investors are going to supply much of the demand.
“For the passive investors, I don’t think it is a massive product for them […] It is going to be active traders, active market participants like some of the retail investors,” said Chris Newhouse, director of research at digital-asset venture fund Cumberland Labs.
Coinbase and the CFTC did not respond immediately to Cointelegraph’s request for comment.
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