tl;dr
Major crypto firms are urging U.S. regulators to formally embrace crypto perpetual futures contracts, which have become the dominant form of crypto derivatives trading, accounting for about 93% of the market. Originating from a 1992 proposal by economist Robert Shiller, perpetual futures have no exp...
Major crypto companies are actively advocating for U.S. regulatory frameworks to officially recognize and govern crypto perpetual futures, which have rapidly become the dominant instrument in crypto derivatives trading. These contracts represent approximately 93% of the market, showcasing their overwhelming popularity.
Coinbase emphasizes the market dominance and ease of retail access provided by perpetual futures, urging regulators to include them under official oversight to capture significant offshore market growth. Paradigm pushes for incorporating decentralized trading protocols and the formation of a special advisory committee aiming to harness blockchain technology’s potential in reshaping financial markets.
Hyperliquid Labs stresses the benefits of decentralized perpetuals in terms of transparency, composability, and self-custody, promoting open blockchain architectures to foster innovation. OKX highlights the liquidity benefits of perpetual futures, noting their appeal to hedgers and arbitrageurs because these contracts lack multiple expiration dates, unlike traditional futures.
The Commodity Futures Trading Commission (CFTC) reflects growing regulatory interest by preparing to enable live trading of crypto perpetual futures. These financial instruments, originally conceptualized by Nobel laureate Robert Shiller in 1992, have no expiration dates and settle daily using price indices. Their innovative structure offers simplicity and high liquidity, making them attractive to retail traders and institutional investors alike.
Industry leaders argue that properly regulating perpetual futures could revolutionize the U.S. derivatives market, bringing in a multi-trillion-dollar offshore market under regulated frameworks. Coinbase points out perpetual futures’ accessibility and their volume surpassing spot crypto trading. Paradigm advocates for regulation that goes beyond traditional exchanges to embrace decentralized finance (DeFi) protocols, suggesting a dedicated advisory committee to promote DeFi perpetuals.
Hyperliquid Labs outlines three core benefits of decentralized perpetuals: unparalleled transparency through immutable and publicly auditable records, composability that encourages interaction between protocols to drive market innovation, and the advantage of self-custody to reduce risks of centralized failures or hacks.
OKX underlines the liquidity advantages of perpetuals due to the absence of multiple expiry dates, attracting a broader range of traders including options hedgers and basis traders who perform arbitrage across exchanges.
In sum, the crypto industry sends a clear message to the CFTC: perpetual futures represent crypto’s most successful financial invention and, with appropriate regulation, the U.S. can harness this innovation to enhance its financial markets and protect investors while promoting growth and technological advancement.