Perpetual futures, one of crypto’s most widely used trading instruments for years, are starting to enter regulated U.S. markets. That has left Wall Street weighing a basic question: are they a short-lived retail phenomenon, or a product that could eventually pressure the traditional futures business?
Early data has made the debate harder to dismiss.
Kalshi posts a $1 billion first week
Kalshi’s perpetual futures topped $1 billion in trading volume within a week of their June launch, marking the company’s biggest product debut since prediction markets.
The exchange has also sought regulatory approval to offer perpetual futures tied to gold and silver, pointing to ambitions that go beyond bitcoin (BTC) and other digital assets.
Why perpetual futures matter
Perpetual futures, often called perps, look similar to standard futures contracts, with one major difference: they do not expire. Traders do not have to close positions or roll them into a fresh monthly or quarterly contract.
Instead, periodic funding payments are used to keep the contract price close to the underlying asset.
The product has become a core feature of global crypto trading. Bank of America has estimated annual perpetual futures volume at about $90 trillion.
Regulators have opened the door, but adoption is slower
On May 29, the Commodity Futures Trading Commission cleared Kalshi to offer the contracts. Coinbase (COIN) has also received approval to list regulated perpetual futures in the U.S.
Interest inside Wall Street, however, has not translated into immediate adoption.
People familiar with the discussions said perps are showing up more often in internal conversations, partly because U.S. regulators are allowing markets that once operated offshore to move onshore. Still, most large financial institutions remain in study mode rather than launch mode.
The firms most likely to move first are proprietary trading firms, market makers and newer clearing firms.
Why big banks are not likely to lead
Unlike large banks, prop firms trade their own capital. That gives them more room to test new venues, absorb operational risk and pull back if the economics stop making sense.
Large banks operate under tighter capital rules, client obligations and reputational constraints. For them, the profit available in a young market may not yet justify the expense of building compliance, clearing and risk systems around it.
That gap matters because “Wall Street” is not a single bloc moving in lockstep. Individual traders and smaller firms often show up first. Market makers tend to join once volume grows. Banks usually want years of data, clear regulatory treatment and stable infrastructure before they commit meaningful capital.
Use cases extend beyond speculation
Perps may also serve as a tool for managing weekend risk.
Traditional futures markets shut for part of the weekend, while wars, elections and policy decisions do not. A trader carrying options exposure on Friday may have to wait until Sunday night to hedge a sharp market move.
A liquid 24-hour perpetual market could alter that dynamic. Firms could adjust positions while events unfold and use weekend pricing to estimate where CME futures may reopen.
People familiar with the market said that could make perps useful both as a hedge and as a source of price discovery.
“The demand has to be there, or the capital won’t be,” one industry insider said, arguing that firms will not commit balance sheet unless customer activity supports the case.
Liquidity, collateral and legal treatment remain unresolved
The main problem is depth. A contract may trade around the clock, but that does not mean institutions can move large positions without moving the market. Weekend liquidity is still thin, and collateral systems do not always move at the pace of the markets they support.
A regulatory dispute is also taking shape. One central question is whether some perpetual contracts should be treated as futures or swaps. That distinction affects margin rules, registration obligations and who can provide liquidity.
Industry insiders said those legal questions may become more important if exchanges push perpetuals into commodities, equities and other traditional markets.
CME has already challenged the current approach
The debate is also turning competitive. CME has challenged the CFTC’s treatment of Kalshi’s bitcoin perpetuals, arguing that the contracts should fall under a different regulatory approach.
Similar disputes could surface if exchanges try to extend perpetual futures into equities and other asset classes.
“A lot of this stuff... is more commercial than people are going to admit to out loud,” another industry insider said, suggesting that some resistance may reflect incumbent exchanges protecting existing businesses as much as concern over market structure.
Wall Street is cautious, not hostile
For now, Wall Street’s stance is cautious rather than hostile. Trading firms see a product they understand. Regulators see a market moving onshore. Exchanges see a chance to capture new volume.
The largest banks, though, are unlikely to lead the way. They are still waiting for the rules, liquidity and infrastructure to catch up.