Bloomberg: Why Is Trump Pushing Perpetual Contracts into the U.S.?
In a recent event, former President Donald Trump praised U.S. financial regulators for their efforts to bring the Singapore-based exchange Hyperliquid to the American market. Trump, who has positioned himself as a crypto-friendly politician, owns a namesake cryptocurrency, and his family has profited significantly from crypto-related ventures. Hyperliquid specializes in perpetual futures contracts—derivatives without expiration dates that allow high-leverage trading on assets ranging from cryptocurrencies to commodities and U.S. stocks.
Originating in the crypto space, perpetual contracts enable 24/7 trading and amplify gains and losses through leverage. While popular, they carry high risks; a study found that less than a quarter of Hyperliquid accounts are profitable. Despite their volatility, perpetual contracts saw $62 trillion in trading volume last year, mostly offshore. Now, under new guidelines from the U.S. Commodity Futures Trading Commission (CFTC), regulated U.S. platforms can offer these products, marking their formal entry into the American market.
This shift has raised concerns among traditional financial institutions. CME Group, the world's largest derivatives exchange, sued the CFTC, arguing that the approval bypassed necessary regulatory frameworks. Critics warn that perpetual contracts, which have previously triggered massive liquidations in crypto markets, could disrupt traditional asset trading if not properly regulated.
Hyperliquid, founded by former quant trader Jeff Yan, has expanded into real-world assets through third-party integrations, with monthly trading volume for these contracts surpassing its crypto offerings. Proponents argue that perpetual contracts provide continuous price discovery, especially during market closures, as seen during geopolitical events. However, adapting to U.S. regulations may require compromises, such as stricter KYC rules and lower leverage, potentially diluting their appeal.
As U.S.-regulated platforms like Kraken's parent company plan to offer Hyperliquid-based products, the market is poised to split into offshore and compliant U.S. segments. The outcome will hinge on balancing innovation with investor protection, shaping the future of perpetual contracts in mainstream finance.
marsbit09/29 10:36
