ChainCatcher reported that Mike Selig, chair of the U.S. Commodity Futures Trading Commission (CFTC), issued a clarification addressing four misconceptions surrounding perpetual futures contracts. His comments focused on whether such contracts require a fixed maturity date, whether their structure is tied to extreme leverage, whether the industry had an opportunity to comment, and how funding-rate mechanisms should be understood in relation to comparable futures positions.
No Fixed Maturity Requirement Under the Cited Framework
On the question of a “fixed maturity date,” one view holds that a defined “futures contract” must include a fixed expiration or delivery date, and that the indefinite nature of perpetual contracts is inconsistent with congressional intent. Selig clarified that neither the Commodity Exchange Act nor CFTC regulations provide an explicit definition of the term “futures contract.” He also stated that neither source requires a fixed expiration date or delivery date. Because Congress did not define the term, the relevant standards are supplied by case law and Commission interpretations, and Selig said neither category requires a fixed maturity date.
Extreme Offshore Leverage Is Not Inherent to the Contract Design
Regarding the “high leverage” misconception, one view argues that by approving the BTCPERP contract, the CFTC approved a futures contract allowing U.S. persons to use leverage as high as 250 times, in violation of its own rules. Selig responded that extreme leverage has been a feature of trading venues offshore since the emergence of perpetual contracts, rather than a feature inherent to the contract structure itself. He said perpetual contracts regulated by the CFTC are subject to the same leverage limits that apply to other CFTC-regulated futures contracts.
Public Comments and Funding Rates
On the issue of “public comments,” one view claims that the CFTC did not provide the industry with an opportunity to participate or express its views. Selig clarified that in April 2025, the CFTC issued a request for comment on “perpetual contracts” and “24/7 trading.” According to his statement, the agency solicited public feedback and received more than 100 comments from a broad range of stakeholders, including many registered entities regulated by the CFTC.
On “funding rates,” one view argues that the mechanism imposes unique and prohibitively high costs on market participants and contributes to improper market conduct. Selig said that after accounting for the costs associated with opening and rolling expiring contracts, the annualized cost of holding comparable positions in dated futures contracts is broadly similar to that of perpetual contracts. He added that, rather than contributing to improper conduct, the funding-rate mechanism functions as a constraint that keeps the contract linked to the underlying spot market.