The race to bring crypto perpetual contracts into the U.S. regulated market has moved from product design to federal court. After Coinbase and Kalshi each advanced U.S.-compliant perpetual offerings, CME filed suit on June 18 in the U.S. District Court for the District of Columbia against the Commodity Futures Trading Commission and its chairman, Michael Selig, asking the court to set aside Kalshi’s approval order and the related policy statement. The outcome could determine how far perpetual contracts can go in the U.S. market.
Coinbase has already listed U.S.-style perpetual futures on its CFTC-regulated derivatives exchange, beginning with micro Bitcoin and Ether contracts. The products track spot prices, embed leverage and trade around the clock.
Perpetual contracts handle most leveraged crypto trading globally. Data cited by Coinbase shows that, under some measures, perpetuals account for more than 90% of total derivatives volume, while derivatives as a whole make up about 80% of all crypto trading. For years, nearly all of that activity took place on offshore exchanges outside U.S. regulatory reach. U.S. investors who wanted access generally had to use virtual private networks to log into those platforms.
Kalshi approval opened a new route
That barrier shifted on May 29. On that date, the CFTC approved KalshiEX to launch BTCPERP, a perpetual contract tied to the spot price of Bitcoin, and issued a policy statement allowing other exchanges to follow a similar path with comparable products.
On June 12, the CFTC added another piece to the framework. It adopted a rule allowing licensed designated contract markets, under certain conditions, to remove the maturity date from existing perpetual-style crypto futures and convert them into true no-expiry perpetual contracts. That change helped open several parallel routes for compliant perpetual products in the U.S.
The same framework is now under legal attack. CME argues in its complaint that the CFTC chairman, acting through an individual approval, overturned Congress’s statutory definition of swap derivatives and bypassed the regulatory structure Congress built for those products.
The core dispute: futures or swaps
CME’s central claim is that perpetual contracts meet the legal definition of swaps under the Commodity Exchange Act. If a court agrees, the industry would face a much tougher rule set, including dealer registration, strict capital requirements and high-frequency reporting obligations. Under that structure, pricing power and license value would move back toward established traditional institutions such as CME.
The report says Selig approved Kalshi’s application in a single day. The CFTC has not treated the lawsuit lightly. A spokesperson said CME chose to use legal action to fight both the regulator and the current administration’s pro-innovation policy direction, accused incumbent institutions of fearing competition in a fair environment, and said the lawsuit is baseless and should be dismissed.
The commercial stakes are substantial. CME said in its complaint that Kalshi has already added more than 10 crypto perpetual contracts following the approval and that related trading volume has passed $1 billion. The CFTC has also been defending its jurisdiction on other fronts. At the end of June, it sued Kentucky over the allocation of regulatory authority in contract markets. The case over Kalshi remains in its early stages, and no court ruling has been issued.
For now, that leaves every exchange building U.S.-style perpetual products on a legal foundation that could still be rewritten by the courts.
Two different products are both being called perpetuals in the U.S.
Traditional futures expire on a fixed date. Traders who want to keep a position open must close it or roll it into a later-dated contract. Perpetual contracts do not expire. Without a delivery date forcing convergence toward spot, they rely on periodic funding-rate transfers between longs and shorts to keep prices anchored.
When a perpetual trades above spot, longs typically pay shorts, raising the cost of holding long exposure and pushing the contract back toward spot. When the perpetual trades below spot, the direction of payment reverses and shorts pay longs.
In the U.S. today, two compliant products are both described as perpetuals even though their legal structures are different. Kalshi’s BTCPERP is a true no-expiry perpetual. Coinbase’s product uses a five-year long-dated futures structure, paired with hourly interest accrual and twice-daily funding settlements, to replicate perpetual price behavior while fitting within the existing futures rulebook.
The CFTC’s June conversion framework would allow those long-dated futures to gradually shed their expiry and become true perpetuals. That is why the term “perpetual futures” in the U.S. now points to two legally distinct products.
Onshore and offshore markets are still taking different paths
Crypto trades all year, with no weekend close and no standard monthly expiry cycle. Perpetual contracts were built for that environment. A leveraged contract without maturity lets traders adjust or maintain positions at any time without choosing a delivery month. Speculation, hedging, market-making inventory management and basis trading can all run through one instrument.
Exchanges favor the model because a single contract can gather liquidity that would otherwise be spread across several expiries. That can deepen the market. It also increases the force of funding rates and forced liquidations. When positioning becomes badly imbalanced, price moves can travel much faster than they do in a layered futures curve.
The U.S. perpetual setup now taking shape differs in several ways from offshore markets. Multiple domestic tracks are being built at the same time. Kalshi has listed true perpetuals across assets including Bitcoin, Ether and XRP. Coinbase, for its part, has listed perpetual-style futures onshore and, on May 29, also opened a compliant channel allowing U.S. investors to access global perpetual and options liquidity through its Deribit platform.
Deribit, the report notes, is a leading crypto options venue. At the end of May, open interest in Bitcoin options on the platform topped $31 billion. On the same day, CME upgraded its own expiring crypto futures and options to around-the-clock trading, closing part of the weekend gap with the spot market. CME’s crypto derivatives reached $3 trillion in notional trading volume last year, and average daily contract volume this year is about 407,200 contracts.
Across these routes, contract architecture, leverage ratios, liquidation rules, collateral requirements and price reference benchmarks all differ. As compliant channels multiply, liquidity, margin and open interest are being split across platforms. Collateral is not portable from one venue to another, and capital efficiency remains limited.
Funding rates, liquidation mechanics and price formation
Funding rates are often described as a fee, but in practice they are a live measure of leveraged positioning and a tool that keeps perpetual prices close to spot.
If leveraged longs push a perpetual above spot, arbitrageurs can short the perpetual while buying spot Bitcoin, a Bitcoin ETF or traditional futures to capture the funding payment. Those trades can pull in spot orders, affect ETF creations and redemptions, and move the basis in CME futures.
At scale, that means positioning in perpetual contracts can feed back into the very spot market the product is supposed to track. A liquid U.S. perpetual market could produce its own domestic funding-rate curve, one that can be monitored by regulators and compared with offshore funding rates long used by traders. If a stable spread opens between U.S. and offshore funding levels, it could reveal differences in user composition, leverage limits and cross-border capital mobility, while helping traders separate directional speculation from hedging demand.
Leverage lets traders control large exposure with relatively little margin, but the tradeoff is obvious. A modest move can exhaust posted collateral. Once account equity falls below maintenance requirements, the exchange liquidates the position automatically. Long liquidations generate market sell orders. Short liquidations generate market buy orders. When liquidations cluster, they can hit more margin thresholds and trigger a chain reaction.
Round-the-clock trading, leverage and fragmented liquidity make crypto especially vulnerable to cascading liquidations. Bringing perpetuals onshore could make U.S. spot price formation more continuous, but it can also make prices more sensitive to trading behavior itself. In the report’s framing, Bitcoin can rise or fall simply because a large wave of margined positions is being closed, not because expectations about the asset’s value have changed.
Regulated venues can manage some of that risk through segregated customer funds, fully disclosed contract rules, continuous market surveillance, standardized liquidation procedures and a legal path for investors in U.S. courts. But compliance does not lower volatility, funding costs or leverage itself, and it cannot guarantee that large liquidations will not hit prices. Even a fully regulated perpetual contract can still force traders out through automatic liquidation.
The next battleground is cross-market collateral
The report argues that the next decisive contest in derivatives may center on whether collateral can move across product lines, allowing traders to use shared margin across spot, ETFs, futures, options and perpetuals.
Today, capital remains scattered across spot accounts, futures brokers, clearinghouses, brokerages and offshore exchanges. That separation creates extra costs. Margin in one market cannot directly support a hedge in another. A holder of a Bitcoin ETF, for example, cannot use it directly as collateral for a perpetual short. CME futures positions and onshore perpetual contracts also sit in separate margin pools.
Coinbase is trying to change part of that structure. It has partnered with Nodal Clear, the clearing arm of Deutsche Börse’s EEX Group, and applied to let Circle-issued USDC serve as margin for U.S. futures, with custody handled by Coinbase Custody Trust. The proposal is awaiting CFTC approval. If it is cleared, it would mark the first compliant use of a stablecoin as futures collateral in the U.S. market. Traders would not need to convert crypto into fiat before posting margin for regulated positions.
That kind of capital efficiency shapes the cost of arbitrage between platforms. More than the race to list additional tokens, the report says, funding efficiency is the more important competitive lever.
In the end, the market faces two immediate tests. One is what happens when Bitcoin enters another stretch of sharp volatility: will U.S. perpetual contracts absorb the move, lead it, or amplify it? The other is how the court ultimately classifies these products — as futures or as swaps. That ruling could either cement the compliant perpetual framework the U.S. has spent months building or force the industry into the stricter swap regime advocated by CME.