Nov. 9, 2026 — The Trump administration’s push to introduce offshore-style perpetual futures into the U.S. financial market is raising concerns among traditional Wall Street institutions, with exchange executives and other market participants warning that the products could expose the multitrillion-dollar derivatives industry to new risks.
Perpetual futures, commonly known as “perps,” originated in cryptocurrency markets outside the United States. Unlike traditional futures contracts, they do not expire and can be traded around the clock, allowing investors to maintain positions indefinitely.
The products are typically leveraged, sometimes by as much as 50 times, and are predominantly used by retail traders.
Their popularity has grown rapidly. Crypto perpetual futures recorded $61.7 trillion in trading volume in 2025, an increase of 29% from the previous year, according to data provider CryptoQuant. Much of the activity takes place on major platforms such as Binance and Hyperliquid, primarily in Asia.
However, traditional financial institutions are concerned that introducing these products without sufficiently strong safeguards could weaken market protections established following the 2007-2009 financial crisis.
U.S. Regulators Open the Door to Perpetual Futures
The Commodity Futures Trading Commission (CFTC) formally approved U.S.-listed cryptocurrency perpetual futures in May, prompting platforms including Kalshi, Coinbase and Robinhood to enter the market.
Last week, the regulator also approved perpetual futures linked to individual stocks, expanding the products beyond cryptocurrencies.
CFTC Chair Michael Selig has argued that maintaining U.S. regulatory oversight is important to protect American investors as the market develops.
The decision, however, has intensified disagreements with established financial exchanges, which argue that the products are being classified incorrectly and may not be subject to sufficient protections.
CME Group and Wall Street Firms Challenge the Approvals
CME Group, one of the world’s largest futures market operators, is suing the CFTC to overturn its May decision.
The exchange argues that regulators have incorrectly classified perpetual contracts as futures, creating unfair competition and failing to account for the products’ potential risks.
A group representing Cboe Global Markets and Citadel Securities also filed a lawsuit last week seeking to reverse the CFTC’s recent approval of equity perpetual futures.
“I think they’ve muddied the waters here significantly,” said Terry Duffy, CME’s chief executive and a more than 40-year industry veteran.
“Anytime you have ambiguity in markets … that could hurt the business.”
The CFTC declined to comment on the concerns raised by executives in the interviews. The regulator has previously accused CME of choosing “lawfare” rather than competing in the emerging market.
The dispute reflects a growing divide between the Trump administration’s support for cryptocurrency and prediction markets and established financial institutions concerned about the consequences for traditional market structures.
Exchanges Argue Perpetual Futures Should Be Regulated as Swaps
A central disagreement involves how perpetual futures should be classified under U.S. financial regulations.
Traditional exchanges argue that perpetual contracts more closely resemble swaps than conventional futures and should therefore face stricter requirements.
Traditional futures allow counterparties to agree on a price for a transaction at a later date. Swaps, meanwhile, involve parties periodically exchanging cash flows or liabilities based on an underlying benchmark.
Perpetual futures do not have expiration dates and instead rely on ongoing funding payments between buyers and sellers to keep contract prices aligned with the underlying asset.
According to the exchanges, these characteristics place the products within the definition of swaps under the 2010 Dodd-Frank Act.
Swaps generally face tougher margin, capital and reporting requirements and are less accessible to retail investors.
The CFTC has taken a different position, arguing that perpetual futures have features similar to traditional futures and that their funding mechanisms serve as substitutes for contract expiration.
Some derivatives lawyers have said the exchanges have raised legitimate legal questions.
Rob Hocking, global head of derivatives at Cboe, warned that the disagreement could turn product classification into a competitive advantage for some market participants.
“The industry is at an inflection point where product classification risks becoming a competitive tool,” Hocking said.
“There needs to be a resolution in short order.”
High Leverage and Automatic Liquidations Raise Concerns
Traditional exchange executives warn that applying futures-style margin requirements to products that behave more like swaps could increase counterparty and liquidity risks.
Perpetual futures frequently use substantial leverage, allowing traders to control positions much larger than the capital they initially commit.
If markets move sharply against those positions, automatic liquidation mechanisms can close trades when an investor’s margin falls below required levels.
Some executives warn that these mechanisms could intensify market volatility by triggering large-scale liquidations during periods of financial stress.
Such concerns are not theoretical. Last year, automatic liquidation mechanisms contributed to the largest-ever liquidation of bitcoin positions, amplifying the market selloff.
The CFTC has previously issued guidance to futures commission merchants emphasizing the need for stronger customer disclosures about automatic liquidation features, particularly during extended trading hours.
24-Hour Trading Could Strain Financial Infrastructure
Another major concern involves the continuous trading model used by perpetual futures platforms.
Unlike traditional U.S. financial markets, which operate within established trading hours, perpetual futures trade 24 hours a day, seven days a week.
That structure requires exchanges, clearing houses, brokers and traders to monitor positions, manage collateral and respond to margin calls at all times.
Executives warn that the arrangement may be manageable in smaller, pre-funded cryptocurrency markets but becomes significantly more complicated when applied to larger financial markets involving substantial amounts of cash and collateral.
Traditional banking and financial infrastructure is not designed to operate continuously in the same way as cryptocurrency trading platforms.
The challenges are already influencing established exchanges. CME said last month that it had shelved a proposed 24-hour crude oil futures contract, mainly because commercial customers were unwilling to staff trading desks over weekends.
Thomas Restout, chief executive of institutional crypto market maker B2C2, said the existing U.S. financial infrastructure was not yet fully equipped to support continuous trading.
“The traditional financial market infrastructure in the U.S. is not yet fully equipped for true 24/7 markets,” Restout said.
New Platforms Defend the U.S. Market Expansion
Companies entering the perpetual futures market argue that bringing the products under U.S. regulatory oversight is preferable to allowing trading activity to remain offshore.
Some industry executives say the market will continue expanding internationally if American regulators do not establish a workable framework.
They also argue that U.S.-based platforms can provide greater transparency and regulatory accountability than offshore alternatives.
Andy Ross, Kalshi’s head of institutional business, said keeping the products within the U.S. regulatory system would be better for investors.
“I think it’s better for those products to trade transparently inside the U.S. regulatory perimeter than for that activity to remain offshore,” Ross said.
New platforms are also seeking to expand perpetual futures into additional asset classes, potentially bringing the products into more direct competition with traditional exchanges.
Chris Perkins, head of crypto at Franklin Templeton, said established financial institutions were facing a level of disruption they had not experienced for a long time.
Political Battle Could Intensify in 2027
The dispute is unfolding against a changing political backdrop.
The Trump administration has supported cryptocurrency and prediction-market businesses, several of which are now developing or operating new trading platforms.
However, Democrats’ victories in the midterm elections, which gave them control of Congress, could lead to stronger scrutiny of the emerging industries next year.
The possibility of increased congressional oversight adds another layer of uncertainty for companies seeking to expand perpetual futures trading in the United States.
For traditional exchanges, the priority remains ensuring that new products operate under appropriate risk-management and regulatory standards.
For cryptocurrency and fintech platforms, the challenge is establishing a U.S. framework that allows innovation without driving traders and capital toward offshore markets.
The growing dispute highlights a broader struggle over the future of U.S. financial markets: whether new digital trading products can operate safely within existing regulatory structures or require a different approach to oversight, leverage and market infrastructure.
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