What Are Perpetual Futures? The New US Rules Explained
Crypto derivatives trading hit $85.7 trillion in volume in 2025. Perpetual contracts are a dominant form of that trading, in the words of the US Commodity Futures Trading Commission (CFTC). Most of it happens offshore, outside the US reach.
The CFTC's May 2026 approval of regulated Bitcoin perpetuals, or perps, changes that.
TL;DR
- What they are: leveraged crypto contracts with no expiry. A recurring funding payment between buyers (longs) and sellers (shorts) keeps the price tied to the asset's live market price.
- Why they mattered offshore: the CFTC says most perp trading happened outside US reach, leaving American firms competitively disadvantaged.
- What changed: on May 29, 2026, the CFTC approved the first US perp, listed by the regulated exchange Kalshi. Onshore means lower leverage, real customer protections, and an unresolved tax question.
What Are Perpetual Futures?
A perpetual future is a contract that lets traders bet on the price of a crypto asset without owning it.
Three features define the product:
- No expiry. Traditional futures settle on a fixed date. A perp stays open indefinitely, so there's nothing to roll.
- Leverage. Collateral works like a security deposit. Put up $1,000, and the exchange lets you control a $10,000 position.
- Two directions. A perp is a contract between two counterparties rather than a purchase, so one side can be long and the other short on the same contract.
Leverage sets how far the market can move against you before the collateral is gone:
Collateral | Leverage | Position controlled | Move that wipes the collateral |
|---|---|---|---|
$1,000 | 2x | $2,000 | ~50% |
$1,000 | 5x | $5,000 | ~20% |
$1,000 | 10x | $10,000 | ~10% |
Rolling a futures position means absorbing basis risk. Futures prices rarely match spot exactly at rollover, and the gap eats into returns. Perps remove the rollover entirely.
Why Perps Dominated Offshore Trading for a Decade
BitMEX, an offshore crypto derivatives exchange, launched the XBTUSD contract on May 13, 2016, the world's first perpetual swap, with up to 100x leverage settled entirely in Bitcoin.
US regulators never approved perps domestically, so the perp market developed largely outside the United States.
Binance, the largest crypto derivatives exchange, alone processed $25.09 trillion of 2025's volume, 29.3% of worldwide activity. Three factors explain why it all stayed offshore.
- There wasn't a CFTC framework for perps, leaving them in legal limbo for US exchanges
- Offshore venues offered 50x to 100x leverage versus far lower US limits
- Without periodic contract rolls to manage, perps were the natural choice for longer-held leveraged positions
The result was a market split entirely along regulatory lines. CFTC Chairman Michael S. Selig later described liquidity as fragmented across foreign platforms, with American crypto firms competitively disadvantaged and US market participants effectively barred from these markets.
What the CFTC Approved on May 29, 2026
On May 29, 2026, the CFTC moved on three fronts at once, establishing the first US regulatory framework for perpetual futures.
Action | What it does | Why it matters |
|---|---|---|
BTCPERP Order | Approves KalshiEX LLC's Bitcoin perpetual, ticker BTCPERP, under the voluntary Regulation 40.3 route, meaning direct CFTC evaluation rather than self-certification | First perpetual futures contract listed on a US exchange |
Says perps referencing asset classes the Order doesn't cover, such as agricultural products, precious metals and equity securities, should take that same 40.3 route | Non-binding, but signals a higher bar for perps on assets outside crypto, such as commodities and equities | |
Let's Coinbase Financial Markets treat perps on Deribit, the Dubai-regulated exchange owned by its parent Coinbase Global, as foreign futures. Adds no-action relief, meaning staff won't enforce, on nine conditions for posting customer crypto there as margin | Gives US clients a regulated route into an offshore venue |
Chairman Michael S. Selig wrote in an op-ed on the CFTC's website that the agency's own failure to provide a workable domestic pathway had pushed perpetual trading to "predictably" occur offshore.
One limit applies. The Order covers products structured like BTCPERP on a designated contract market, the CFTC's term for a registered exchange, not perps as a category. The Commission will address those more generally later.
By June 3, 2026, Kalshi listed 13 approved perpetual contracts across Bitcoin, Ethereum, and other major assets. What changes for US traders splits three ways: taxes, protections, leverage.
What This Means for US Traders and Businesses
The Tax Question Nobody Has Answered Yet
The biggest open question about US-regulated perps is how they get taxed. Section 1256 splits gains and losses on regulated futures 60% long-term and 40% short-term, regardless of holding period.
Perpetuals don't fit cleanly: they never expire and settle through a funding rate rather than on a delivery date. The IRS has issued no guidance on whether they qualify.
What's at stake:
Scenario | Top rate | Form |
|---|---|---|
If Section 1256 applies | 26.8% blended, per tax advisory firm Green Trader Tax | |
If it doesn't | Up to 37% ordinary income | Schedule D / Form 8949 |
Losses, if 1256 applies | 3-year carryback against past gains |
Roughly ten points of tax rate hang on a question the IRS hasn't addressed. Until it does, this is a conversation for your tax advisor, not a settled benefit.
What You Do Get Today
The protections aren't in doubt. Classifying a perp as a futures contract determines how customer positions and margin are handled if the broker fails, under Subchapter IV of Chapter 7 of the Bankruptcy Code and Part 190 of the CFTC's rules. Customer funds sit in segregated accounts.
None of that applies on an unregulated offshore exchange.
What Changes for Institutions and Platforms
Coinbase Financial Markets received CFTC staff relief on May 29, 2026, to offer US clients global crypto perps as a registered futures commission merchant, the broker that routes orders and holds customer funds. Two things changed.
- Domestic leverage runs far below offshore levels. Kalshi's approved contracts topped out at 5.7x on Bitcoin as of June 3, 2026, versus 50x to 100x on offshore venues
- Letter 26-17 lets Coinbase post customer crypto as margin through Deribit, its Coinbase Global affiliate, on nine conditions including a disclosure statement covering fund flow and default management
Binance, Bybit, and OKX, all offshore exchanges, now have a domestic competitor pulling US institutional volume.
For businesses and developers that need to move funds into and out of crypto as part of that flow, on/off-ramp infrastructure becomes critical. Mercuryo's on-ramp and off-ramp infrastructure handles that layer, letting platforms accept card payments, convert to crypto, and off-ramp back to fiat without building settlement rails from scratch.
Whether that pulls meaningful volume onshore will depend on how quickly domestic venues build out the product depth that offshore exchanges spent a decade developing.
Frequently Asked Questions
What are perpetual futures in crypto?
Perpetual futures are leveraged derivative contracts that track the price of a crypto asset and never expire. A position stays open until the trader closes it or runs out of collateral.
Are perpetual futures legal in the US?
Only when offered through a CFTC-approved platform. That became possible on May 29, 2026, when the agency approved Kalshi's Bitcoin contract, ticker BTCPERP, the first perp cleared for a US exchange. Perps on unregistered offshore venues remain outside that approval.
What is the funding rate in perpetual futures?
The funding rate is a periodic payment between long and short traders that keeps a perpetual contract's price aligned with the spot market. When the perp trades above spot, longs pay shorts, and when it trades below, shorts pay longs. Most venues charge it every 8 hours.