This morning, the Commodity Futures Trading Commission (CFTC) took historic action to allow trading of a true bitcoin perpetual contract by a CFTC-registered exchange. In doing so, the Commission charted a path for one of the most liquid segments of the crypto asset markets to exist within the US regulatory framework. Having true perpetual contracts in the United States is a major step forward in meeting President Trump’s goal of establishing the United States as the crypto capital of the world.
Unlike a traditional futures contract, which was designed for markets that close overnight and on weekends, a perpetual contract (also known as a “perpetual” or “perp”) is a type of derivatives contract that does not have a fixed expiration date. Instead, counterparties periodically exchange a funding rate payment, similar to variation margin, which is designed to maintain relative price parity with the spot price of the underlying asset. In markets that operate 24/7, the lack of an expiration date allows market participants to maintain continuous exposure to prices without periodic expirations and the associated costs of renewing contracts.
Perpetual contracts were first theorized in a discussion article published in 1992 by Nobel Prize-winning economist Robert Shiller. Since then, perpetuals have become a fundamental risk management and price discovery tool in global cryptoasset markets.
However, despite clear market demand and the CFTC’s legal obligation to promote responsible innovation, the CFTC has, thus far, failed to provide a viable path for perpetual cryptoassets to exist compliantly in the United States.
As a result, unsurprisingly, perpetual commercial activity has occurred abroad. With liquidity fragmented among foreign platforms, US cryptoasset companies were at a competitive disadvantage and US market participants were effectively prohibited from accessing these markets.
Under my leadership, the CFTC has taken a different approach. One that is consistent with the CFTC’s mandate to promote responsible innovation and fair competition, and that is rooted in the belief that responsible innovation requires regulatory clarity.
The Commission’s long-standing and principled oversight of the commodity derivatives market will now include a viable framework for true cryptoasset perpetual contracts. This is a framework that can limit excessive leverage, volatility and systemic risk, rather than shifting those risks offshore to unregulated locations.
While the current approval of perpetual bitcoin may seem novel, history tells a different story.
For more than a century and a half, U.S. commodity futures markets have served as a testing ground for innovation and have evolved alongside technological progress. From agricultural futures in the 19th century to e-commerce in the 20th century to bitcoin futures under Trump 1.0, our markets have constantly adapted to new forms of trading, risk transfer, and capital formation. Cryptoassets and blockchain-based financial infrastructure represent one of the many next chapters in that story.
In my opinion, the question was never whether perpetual cryptoasset contracts would exist. Rather, the question was whether they would exist under American oversight, American regulations, and the American rule of law.
For too long, bureaucratic regulators approached the new frontier of finance with the assumption that innovation itself represented a threat to the public interest. This slowdown approach led to regulation by authorities and forced American innovators to flee the United States and build beyond our borders.
Fortunately, thanks to the leadership of President Donald Trump, those days are behind us and the United States is now the crypto capital of the world. Today’s action against local perpetual cryptoasset companies was the natural extension of this American achievement and reinforces America’s leadership in digital financial technology.
Although the work is far from finished, today marks an important milestone.
For the first time, the world’s most sophisticated financial system has opened the door for perpetual cryptoassets to operate within its regulated framework. And while Congress has an important role to play in providing long-term legal clarity for cryptoasset markets, the CFTC will continue to advance initiatives related to tokenized collateral, cryptoasset market structure, and prediction markets.
Innovation is coming ashore.
American cryptocurrency perpetual assets are here, and the US will continue to lead this new frontier of finance.
