Perpetual futures are moving into regulated markets, and the objection has become familiar: a retail-heavy, high-leverage instrument could import systemic risk. The CoinDesk opinion piece argues that this criticism is pointed at the wrong target.
Its central claim is that systemic risk in a derivatives market is a function of the venue where perpetuals trade, not the contract itself. What sets the risk profile, the authors write, are venue-level choices such as leverage caps, margin requirements, funding design and default management. None of those are inherent to a contract with no expiry.
Risk transmission, not contract form
The article does not dismiss the concern outright. It says crypto’s sharpest deleveraging episodes have come from multiple causes, including macro shocks, stablecoin de-pegs, exchange outages, oracle failures, excessive leverage and thin liquidity. It cites the October 2025 cascade as one of the more recent examples.
What turns a sell-off into a systemic event, the piece says, is the transmission mechanism. In crypto markets, that usually means a liquidation cascade: forced liquidations push prices lower, shared reference pricing and arbitrage carry the move across venues, and the drop triggers more liquidations.
The authors argue that the most violent versions of that process come from venue design. A manipulable index can trigger liquidations on false prices. Auto-deleveraging can claw back profitable positions to plug a shortfall. Neither, they say, is a defining feature of perpetual futures.
Bullish authors tie the debate to market structure
The article is written by Chris Tyrer, president of Bullish Exchange, and Tram Doman, who leads product marketing at Bullish Exchange. It states that Bullish has filed with the Commodity Futures Trading Commission for designation as a Designated Contract Market, or DCM, and for registration as a Derivatives Clearing Organization, or DCO.
From their perspective, the real question is not whether perpetuals belong in regulated markets, but how a specific venue is built. Regulatory requirements can establish a baseline through segregated funds, a registered clearing entity and supervisory oversight. The way a venue manages a default under stress is a separate design choice, and the article says that can vary even within the regulated perimeter.
A different objection: institutions may not want perpetuals
The piece then turns to what it describes as a sharper objection, one centered on demand rather than risk. Institutions may simply not want perpetual futures.
It points to a recent JPMorgan note that found limited institutional appetite for perpetuals, treating them as speculative instruments rather than replacements for regulated futures. The note cited the absence of term structure and the presence of basis risk, making perpetuals imperfect substitutes.
The authors agree with that point on mechanics. As a substitute for dated futures, perpetuals fall short. Funding is variable and cannot be locked in the way a futures basis can, and for a hedger that needs term structure and delivery, perpetuals are the wrong tool.
Why institutions still use them
That, however, is not how the authors say institutions actually use perpetuals. Drawing on Bullish’s own options and perpetual markets, they write that many institutions trading options on the venue use perpetuals to hedge delta, meaning the directional exposure of an option to moves in the underlying asset.
In that use case, the article says, perpetuals are not standing in for dated futures. They are being chosen because that is where the liquidity is. For delta hedging, term structure matters less than market depth and continuous execution.
The piece adds that many of crypto’s dated futures trade thinly, while perpetuals are the deepest and most continuously tradable delta-one instruments available. Part of that liquidity comes from the same retail flow critics look down on. A desk managing risk in real time, the authors write, will prioritize execution over elegance.
Liquidity from retail, structure for institutions
The article describes the liquidity advantage of perpetuals as structural. Retail traders gravitate to them because they have no expiry, require no roll and can trade continuously. That design concentrates liquidity in the perpetual market.
In the authors’ view, bringing perpetuals onshore offers an underappreciated benefit: a deep and durable liquidity pool in the very instruments a hedging desk wants to use. On that basis, they fold the two sides of the debate into one. The liquidity institutions want already exists, and much of it has been drawn by retail participation. The question is whether that liquidity can be used safely through institutional-grade default management.
Default management as the dividing line
The piece says the debate was never really about whether perpetuals are dangerous in the abstract. The real test is what happens when the market is under stress and a venue has to manage a default.
It contrasts auto-deleveraging with the clearinghouse model. If a liquidation shortfall exceeds an insurance fund, one backstop is to socialize losses through auto-deleveraging, forcing offsetting profitable positions to close at an off-market price to absorb the defaulter’s loss.
The clearing model works differently, according to the article. Losses are first absorbed by the defaulter through that party’s own margin and fund contribution. The position is then worked out through the order book or, if it is large, auctioned to other clearing members. Behind that sits a pre-funded guaranty fund sized to regulated clearinghouse standards, with broad loss-sharing only beyond that point and only rarely.
The authors do not say this removes risk entirely. Their argument is narrower: it breaks the chain that can turn a single failed account into a market-wide cascade by absorbing the default at the source instead of pushing it into a falling market.
That distinction, the article says, is what separates a venue that contains failure from one that transmits it. And that transmission is the systemic risk critics are worried about. Meet that standard and perpetuals can become infrastructure institutions are willing to use. Miss it, and the hazard critics describe remains, whether the venue is regulated or not.
The piece closes by saying perpetuals were never the whole story. The design is.
CoinDesk notes that the views expressed in the column are those of the authors and do not necessarily reflect the views of CoinDesk, Inc. or its owners and affiliates.