November 17 2025
Progressive organizations within the crypto industry are advocating for the adoption of perpetual futures contracts by regulators. They argue that these financial instruments, if properly regulated in the US, could transform derivatives trading. Perpetual contracts are an innovative form of derivatives that have gained popularity in recent years. In fact, over 90% of crypto derivatives trading volume is due to these contracts, especially outside the United States.
The concept of perpetual futures was proposed in 1992 by American economist Robert Shiller. He saw opportunities for trading illiquid assets such as real estate and human capital by introducing contracts without expiration dates, which were paid out based on price indices. These contracts are settled daily between long and short positions, which increases their appeal.
The Commodity Futures Trading Commission (CFTC) is currently investigating whether their current regulations are sufficient to manage these new financial products, with a particular focus on the risks arising from their explosive growth in the crypto markets.
Coinbase, one of the largest exchanges in the crypto space, has indicated that bringing offshore crypto derivatives within US regulation would provide a significant boost to US markets and consumers. The company noted that perpetual futures account for over 90% of the crypto futures volume, even surpassing spot trading. The simplicity of these contracts makes them more accessible to retail investors, who can trade leveraged in a user-friendly way without the complications of traditional futures or spot crypto.
Paradigm, a research-focused crypto investment firm, is calling on the CFTC to embrace decentralized trading protocols as well. This approach would extend beyond traditional exchanges to include more than just that. They’re calling for the creation of a dedicated perpetuals advisory committee to explore the potential of decentralized finance (DeFi) and smart contracts, with the goal of driving broader transformation of financial markets.
Hyperliquid Labs, which is focused on developing a custom Layer-1 blockchain, has outlined three key benefits of decentralized perpetuals. First, transparency is said to be unparalleled, as every user action, including order placement, cancellation, execution, and liquidation, is permanently and publicly recorded. This is a significant departure from traditional systems where trading data is often proprietary to the exchange.
Additionally, Hyperliquid Labs points to the importance of open architecture within blockchains, which promotes collaboration between different protocols, enabling innovation and new applications. It also promotes self-custody, where traders can manage their own collateral in their wallets, reducing reliance on exchanges and mitigating risks associated with mismanagement or technical shortcomings by centralized parties.
OKX points out that the liquidity benefits of perpetuals are advantageous because these contracts help consolidate trading volumes, which in traditional futures are often spread across multiple expiration dates. The dynamics of perpetual futures also attract options traders looking to hedge their positions and basis traders looking for arbitrage opportunities across multiple exchanges.
With the CFTC’s increased interest in crypto perpetuals and its intention to allow them to be actively traded very soon, it is clear that the future of these innovative financial instruments could be promising.
What are perpetual futures?
Perpetual futures are a type of derivative with no expiration date that is settled daily based on price indices, offering the advantage of constantly available trading opportunities.
Why are perpetuals popular in the crypto market?
Perpetuals are attractive to traders because of their simplicity and the possibility of leverage, without the complications of traditional futures contracts.
How can DeFi contribute to the development of perpetual futures?
Decentralized finance (DeFi) protocols can promote the development and adoption of perpetual futures by enabling innovative applications and collaboration between different blockchain systems.
In short, the integration of perpetual futures within the regulated markets in the US could significantly increase the impact of crypto derivatives, provided the right measures are taken to manage the associated risks. The future is bright and offers opportunities for both investors and mainstream markets.
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