US paves way for onshore crypto-linked perpetual futures

(May 29): The main US derivatives regulator said perpetual futures contracts for cryptocurrencies could trade on registered onshore platforms if they meet certain conditions, bringing to America a popular trading instrument that has until now existed almost entirely overseas.

The staff of the US Commodity Futures Trading Commission (CFTC) released an advisory on Friday that lays out guidelines on 24/7 trading, clearing and settlement, to help registered firms launch products and comply with US laws. The agency issued a separate policy statement, saying the agency will review contracts on a case-by-case basis.

The staff advisory lays out key considerations around the potential risks of around-the-clock trading and how to mitigate them. Known as “perps”, perpetual futures are a type of derivative with no expiration date, made popular by the crypto industry.   

Derivatives referencing crypto assets may be well-suited for 24/7 trading but agricultural products may not, the advisory states.

Kalshi Inc also got the nod from the regulator on Friday to let investors access crypto perpetual futures on its platform that will be fully regulated by the CFTC.

The company said it aims to launch crypto perpetuals on more than a dozen currencies pending regulatory reviews. Kalshi said similar offering on agricultural commodities will not be part of the offering. In April, Polymarket announced that it is launching perpetuals.

“This marks Kalshi’s evolution from prediction market leader to next-gen derivatives exchange,” said Tarek Mansour, the chief executive officer of Kalshi. “Onshore, safe, and regulated perps will improve capital allocation and risk management for countless American businesses.”

The products will be Kalshi’s first foray beyond the event contracts it offers on its prediction markets. Kalshi and its main competitor Polymarket already allow customers to wager on the future price of crypto tokens using their standard event contracts. Crypto trading has become one of the fastest-growing categories on both exchanges.