This morning, the Commodity Futures Trading Commission (CFTC) took historic action to permit the listing of a true bitcoin perpetual contract by a CFTC-registered exchange. In doing so, the Commission charted a path for one of the most liquid segments of the crypto asset markets to exist within the U.S. regulatory framework. Having true perpetual contracts in the United States is a major step forward in delivering on President Trump’s goal of cementing America as the crypto capital of the world.
Unlike a traditional futures contract, which was designed for markets that close overnight and on weekends, a perpetual contract (also known as a “perpetual” or “perp”) is a type of derivative contract that has no fixed expiration date. Instead, counterparties periodically exchange a funding rate payment, similar to variation margin, that is designed to maintain relative price parity with the underlying asset’s spot price. In markets that operate 24/7, the lack of an expiration date allows market participants to maintain continuous price exposure without periodic expirations and the associated costs of rolling over contracts.
Perpetual contracts were first theorized in a discussion paper published in 1992 by Nobel-prize-winning economist Robert Shiller. Since then, perpetuals have become a foundational risk-management and price-discovery tool in the global crypto asset markets.
Yet, despite clear market demand and the CFTC’s statutory obligation to promote responsible innovation, the CFTC has – until now – failed to provide a workable pathway for crypto asset perpetuals to exist in a compliant manner in the United States.
As a result, perpetual trading activity has predictably occurred offshore. With liquidity fragmented across foreign platforms, American crypto asset firms were competitively disadvantaged, and U.S. market participants were effectively barred from accessing these markets.
Under my leadership, the CFTC has taken a different approach. One that is consistent with the CFTC’s mandate to promote responsible innovation and fair competition, and one rooted in the belief that responsible innovation requires regulatory clarity.
The Commission’s long-standing, principled oversight of the commodity derivatives market will now include a workable framework for true crypto asset perpetual contracts. This is a framework that can limit excessive leverage, volatility and systemic risk, rather than pushing those risks offshore to unregulated venues.
While today’s approval of the bitcoin perpetual may seem novel, history tells a different story.
For more than a century and a half, America’s commodity futures markets have functioned as a proving ground for innovation and evolved alongside technological progress. From agricultural futures in the nineteenth century, to electronic trading in the twentieth century and bitcoin futures under Trump 1.0, our markets have consistently adapted to new forms of commerce, risk transfer and capital formation. Crypto assets and blockchain-based financial infrastructure represent one of the many next chapters in that story.
In my view, the question was never whether crypto asset perpetual contracts would exist. Instead, the question was whether they would exist under American oversight, American standards and American rule of law.
For too long, bureaucratic regulators approached the new frontier of finance with the assumption that innovation itself represented a threat to the public interest. This decelerationist approach resulted in regulation by enforcement and forced American innovators to flee the U.S. and build beyond our borders.
Fortunately, thanks to the leadership of President Donald Trump, those days are behind us, and the U.S. is now the crypto capital of the world. Today’s action to onshore crypto asset perpetuals was the natural extension of this American achievement and reinforces U.S. leadership in digital financial technology.
Although the work is far from finished, today marks an important milestone.
For the first time, the world’s most sophisticated financial system has opened the door for crypto asset perpetuals to operate within its regulated framework. And while Congress has an important role to play in delivering long-term statutory clarity for crypto asset markets, the CFTC will continue advancing initiatives related to tokenized collateral, crypto asset market structure and prediction markets.
Innovation is coming onshore.
American crypto asset perpetuals are here, and the U.S. will continue to lead in this new frontier of finance.