Latest news: Kalshi’s launch of CFTC-regulated perpetual cryptocurrencies has reignited a long-standing debate over the definitions of financial markets.
- Kalshi’s John Lothian and Udesh Jha joined The Policy Protocol to discuss this topic.
- John Lothian, editor of John Lothian News, argued that perpetual contracts are similar to swaps because they involve recurring bilateral cash flow payments through funding rate mechanisms.
- Udesh Jha, head of currency analysis at Kalshi, responded that perpetual securities work like futures because they are exchange-traded, centrally cleared and designed to track the underlying spot markets.
- The debate follows the recent approval and launch of perpetual cryptocurrencies on Kalshi under the supervision of the CFTC.
The disagreement: Both sides view the same product through different regulatory lenses.
- Lothian said perpetual contracts differ from traditional futures because funding rate payments create continuous cash flows between market participants, a feature he associates with swaps.
- Jha argued that funding rates simply make funding costs explicit rather than including them in futures prices, making perpetual ventures a more efficient version of existing futures markets.
- According to Jha, perpetuals also eliminate the need for traders to roll positions into new contract months, reducing friction and costs.
Why it is important: The classification could determine who can access the products and under what rules.
