By:Andjela Radmilac
Compiled by:Saoirse,Foresight News
Coinbase listed American-style perpetual-like futures on its CFTC-regulated derivatives exchange, with the initial products being Micro Bitcoin and Micro Ethereum contracts. These contracts are pegged to spot prices, offer built-in leverage, and support 24/7 trading.
Perpetual contracts account for the vast majority of global crypto leverage trading and are now formally entering the US market. In addition to providing investors with a new channel to bet on Bitcoin's price movements, they also bring the entire set of trading mechanisms that have long dominated pricing logic in offshore markets to the US. Multiple US exchanges have successively introduced funding rates, perpetual leverage, and auto-deleveraging mechanisms, but there are significant differences in contract design rules among them.
Perpetual contracts constitute the vast majority of crypto derivatives trading volume. According to Coinbase statistics, by some measures perpetual contracts account for over 90% of total derivatives volume, while derivatives overall account for about 80% of all cryptocurrency trading.
For years, such trading occurred almost exclusively on exchanges outside US regulatory jurisdiction. US investors wanting to participate could only use VPNs to access offshore platforms. This barrier was broken on May 29th: the CFTC approved KalshiEX to launch the BTCPERP perpetual contract pegged to the Bitcoin spot price, while also issuing a policy statement allowing other exchanges to launch similar products following this pathway.
On June 12th, the CFTC introduced new rules allowing licensed designated contract exchanges to remove the expiration dates from existing perpetual-like crypto futures, transforming them into true perpetual contracts with no expiration.
The regulatory framework that enabled this series of changes is now entangled in a federal court lawsuit. The outcome of this judicial contest will determine how far perpetual contracts can go in the US market.
On June 18th, CME sued the CFTC and its Chairman Michael Selig in the US District Court for the District of Columbia, asking the judge to revoke the approval order for Kalshi and its accompanying policy statement. CME's complaint alleges that the CFTC Chairman single-handedly overturned Congress's statutory definition for swap derivatives and bypassed the entire regulatory system Congress established for such derivatives through personal approval.
CME's core argument: Perpetual contracts meet the statutory definition of swap products under the Commodity Exchange Act. If classified as swaps, the industry would face stricter regulatory rules, including dealer registration, stringent capital requirements, and high-frequency information reporting, shifting market pricing power and licensing resources back to established traditional institutions like CME. CFTC Chairman Selig approved Kalshi's application in just one day.
The CFTC is not taking this lawsuit lightly. A spokesperson stated that CME chose legal action against the regulatory agency and the current administration's policy direction of encouraging innovation, accusing established institutions of fearing competition in a fair market environment, and called the lawsuit baseless, vowing to seek its dismissal by the court.
The lawsuit involves significant commercial interests. CME's complaint states that based on this approval, Kalshi independently launched over ten types of crypto perpetual contracts, with related trading volume exceeding $10 billion. The CFTC is also defending its jurisdictional authority on other fronts, filing a lawsuit against the state of Kentucky in late June to clarify regulatory ownership of contract markets. The case is still in its early stages with no court ruling yet. This means all exchanges currently building American-style perpetual products are operating on a legal foundation that could be rewritten by the court at any time.
Current US Perpetual Contracts Are Divided into Two Structures
Traditional futures have fixed expiration dates. Traders who wish to hold positions long-term can only close them out or roll them over to longer-dated contracts. Perpetual contracts have no expiration timeframe. Since there is no expiration and delivery to pull prices towards spot, perpetuals rely on periodic settlements of funding rates between longs and shorts to achieve price pegging.
When the perpetual contract price is higher than the spot price, typically longs pay a funding fee to shorts, increasing long holding costs and prompting longs to sell; if the contract price is lower than spot, the flow reverses, with shorts paying longs.
Currently, the US market has two types of compliant products both called perpetual contracts, with completely different legal structures. Kalshi's BTCPERP is a true perpetual contract with no expiration date; Coinbase's product uses a five-year ultra-long-term futures structure, paired with hourly interest accrual and twice-daily funding rate settlements, replicating the price behavior of perpetual contracts through this design while fitting existing futures regulatory rules.
The conversion plan finalized by the CFTC in June allows such long-dated futures to gradually eliminate expiration dates in the future, upgrading them into true perpetual contracts. This is also why "perpetual futures" in the US refers to two legally different products.
The crypto market operates 24/7, with no weekend closures or monthly expiration cycles. Perpetual contracts were born to adapt to this environment. Leveraged contracts without expiration allow traders to adjust or hold positions at any time without choosing delivery months. Speculation, hedging, market maker inventory management, and basis trading can all be accomplished using a single contract.
Exchanges favor the perpetual model because a single contract can concentrate liquidity that would otherwise be scattered across multiple expiring contracts, resulting in greater market depth. However, highly concentrated liquidity also amplifies the influence of funding rates and forced liquidations: once severe position imbalances occur in the market, price volatility transmission is much faster than in traditional futures with multiple maturity layers.
The perpetual system landing in the US has many differences from offshore markets, with multiple perpetual trading tracks being built simultaneously domestically: Kalshi launched true perpetuals, already covering multiple tokens including Bitcoin, Ethereum, and XRP; Coinbase, on one hand, listed perpetual-style futures on its domestic exchange, and on the other hand, opened a compliant channel on May 29th allowing US investors to access global perpetual and options liquidity through its subsidiary platform Deribit. Deribit is a top global crypto options platform, with Bitcoin options open interest exceeding $31 billion at the end of May.
On the same day, CME upgraded its expiring crypto futures and options to 24/7 trading, closing the weekend trading gap with the spot market. CME's crypto derivatives had a notional trading volume of $3 trillion last year, with average daily contract volume around 407,200 contracts this year.
The contract structures, leverage ratios, clearing rules, collateral requirements, and price reference benchmarks for these trading paths are all different. While compliant trading channels are increasing, liquidity, margin, and open interest are split across multiple platforms, collateral cannot be used across platforms, leading to low capital efficiency.
Funding Rates, Liquidation Mechanisms, and the Battle for Global Pricing Power
Funding rates are often simply understood as fees. A more accurate interpretation is: they reflect the distribution of leveraged long and short positions in the market in real-time, continuously pulling perpetual prices towards spot.
When a large number of leveraged longs push the perpetual price higher than spot, arbitrageurs can short the perpetual while simultaneously buying Bitcoin spot, Bitcoin ETFs, or traditional futures to earn the funding fee. This arbitrage trading drives spot orders, ETF creations/redemptions, and also affects the basis of CME futures.
Large-scale arbitrage can cause the position situation of perpetual contracts to inversely affect the spot market they are supposed to peg. Liquid American-style perpetuals will form a unique domestic funding rate curve, becoming a regulated indicator of leveraged sentiment, contrasting with the offshore rates traders have long referenced. If a stable difference persists between US and offshore funding rates, it can clearly reflect differences in user structure, leverage limits, and cross-border capital flow freedom between the two regions, helping the market judge whether market movements stem from directional speculation or hedging demand.
Leverage allows large positions to be controlled with small amounts of margin, at the cost that a small price drop can deplete margin. Once account margin falls below the maintenance margin line, the exchange automatically liquidates the position. Longs being liquidated generate market sell orders, shorts being liquidated generate market buy orders; concentrated forced liquidations can easily breach more traders' margin thresholds, triggering a chain reaction.
24/7 trading, high leverage, and fragmented liquidity make crypto assets highly prone to chain liquidations. Perpetual contracts landing in the US will make domestic spot price trends more continuous, but prices are also more susceptible to being influenced by trading behavior itself: Bitcoin price movements may simply stem from large-scale margin liquidations, unrelated to changes in the asset's intrinsic value expectations.
Compliant trading venues can control some risks: client funds are segregated, contract rules are fully transparent, markets are monitored throughout, liquidation processes are standardized, and investors have US legal recourse. But compliance cannot reduce volatility, funding costs, or leverage itself, nor can it guarantee that large liquidations won't inversely impact the market. Even if perpetual contracts are fully compliant, traders can still be automatically liquidated by the system.
The likely decisive factor in future derivatives competition is the ability to use cross-product collateral, allowing traders to share margin across spot, ETFs, futures, options, and perpetuals. Currently, funds are split across multiple systems: spot accounts, futures brokers, clearinghouses, brokerages, offshore exchanges, etc. Fragmented capital incurs additional costs; margin from one account cannot be used to secure hedge positions in another market.
For example: Holding Bitcoin ETFs cannot directly serve as margin for perpetual short positions; CME futures positions and domestic perpetual contracts belong to two separate margin pools. The next round of competition in the derivatives industry revolves around breaking down cross-market margin barriers.
Coinbase Derivatives, in partnership with Nodal Clear, a clearing agency under Deutsche Börse's EEX Group, applied to use Circle-issued USDC stablecoin as margin for US futures, with Coinbase Custody Trust responsible for holding USDC. The proposal awaits CFTC approval. If approved, this would be the first compliant use of stablecoins as collateral in the US futures market. Traders would not need to convert crypto assets into fiat currency and could directly use crypto-native stablecoins to provide margin for compliant positions.
This level of capital efficiency determines the arbitrage cost of price differences between major platforms. Compared to listing more tokens, capital efficiency is the more core competitive advantage.
The number of new contracts listed by exchanges will not be the final dividing line, as all major platforms can quickly list a large number of tokens. There are two real tests ahead: first, when Bitcoin experiences another round of剧烈 volatility, will domestic perpetual contracts digest, lead, or amplify the波动; second, the final court ruling determining whether these contracts are essentially futures or swaps. This judgment will either solidify the perpetual compliance ecosystem the US has spent over half a year building, or force the industry to accept the stringent swap regulatory rules advocated by CME.
