Key Highlights
- The Crypto Council for Innovation urged the CFTC to continue evaluating perpetual contracts under existing derivatives rules.
- CCI supports reviewing individual contracts based on their underlying markets rather than creating a separate framework for perpetuals.
- The group also asked the CFTC to consider perpetual contracts tied to crude oil, natural gas and electricity.
The Crypto Council for Innovation (CCI) has urged the U.S. Commodity Futures Trading Commission (CFTC) to continue allowing perpetual contracts to be evaluated under the agency’s existing derivatives framework.
In a letter submitted on August 26, CCI responded to the CFTC’s review of perpetual contracts and round-the-clock derivatives trading.
The group argued that regulators should assess each contract according to the characteristics and risks of its underlying market rather than treating perpetuals as a separate class of derivatives.
The submission comes as the CFTC considers how products that trade continuously and have no fixed expiration date should fit within the U.S. derivatives market.
CCI backs case-by-case review
CCI said the CFTC’s existing rules provide a mechanism for reviewing perpetual contracts without establishing a separate regulatory regime.
The group specifically supported the use of CFTC Regulation 40.3, which allows registered entities to voluntarily submit new products to the Commission for review and approval.
Under the process, regulators can examine issues including market surveillance, manipulation risks, position limits, and other characteristics of a proposed contract.
CCI argued that this approach should also be available as exchanges seek to introduce perpetuals tied to different underlying assets.
Bitcoin contract provided an early example
The discussion follows the CFTC’s May 29 approval of KalshiEX’s BTCPERP contract, a perpetual product linked to Bitcoin.
The contract provided an early example of a perpetual product being offered through a U.S. derivatives venue.
The CFTC’s accompanying policy statement also addressed the possibility of perpetual contracts linked to other asset classes, including equities, agricultural commodities and precious metals.
That has broadened the discussion beyond whether perpetuals can be offered for digital assets to whether similar products could be developed for other markets.
CCI points to energy markets
CCI specifically asked the CFTC to consider perpetual contracts tied to crude oil, natural gas and electricity.
Energy markets have different characteristics from cryptocurrencies. Prices can be influenced by physical supply, storage capacity, weather, seasonal demand and regional market conditions.
CCI therefore noted that any energy-related perpetual would need to account for the structure and risks of the underlying commodity market.
Other industry participants have made similar requests. Hyperliquid and Trade[XYZ] have separately asked the CFTC to consider perpetual contracts linked to crude oil and natural gas.
The submissions indicate that interest in perpetual products is extending into traditional commodity markets.
How Perpetual Contracts Differ from Futures
Traditional futures contracts have fixed expiration dates. Perpetual contracts do not.
Instead, perpetuals generally use funding mechanisms to keep their market price close to the price of the underlying asset.
For traders, the structure removes the need to periodically close or roll an expiring contract.
The products can also operate continuously, allowing positions to be opened or closed outside the trading hours of traditional markets.
That structure does not eliminate the risks associated with derivatives. Leverage, funding payments, liquidations and market liquidity remain important considerations.
For regulators, the question is whether individual products can operate with appropriate surveillance, reporting and risk controls.
Blockchain could support some market functions
CCI also pointed to possible applications for blockchain technology within perpetual markets.
Onchain infrastructure could potentially provide additional transaction and position data that could be used for monitoring requirements such as margin, leverage and position limits.
Some compliance processes could also be automated through programmable systems.
These remain potential applications rather than requirements established by the CFTC. Regulated derivatives markets would still need to meet applicable standards for reporting, surveillance and risk management regardless of the technology used.
U.S. 24/7 derivatives market still developing
The CCI submission comes as the CFTC examines whether derivatives trading can operate beyond the traditional schedules used by U.S. financial markets.
The review covers cryptocurrency perpetuals as well as potential applications involving other asset classes.
For crypto traders, the issue is particularly relevant because many perpetual products have historically been available through offshore platforms.
Whether more activity moves to U.S.-regulated venues will depend on the products approved, their structure, available liquidity, and demand from market participants.
CFTC weighs how far perpetuals can expand
CCI’s submission does not call for blanket approval of perpetual contracts. Instead, it argues that the CFTC should continue assessing products individually under its existing rules.
The approach would leave regulators to consider the characteristics of each underlying market while maintaining the same general derivatives framework.
The CFTC’s review will therefore help establish how perpetual contracts can operate within the U.S. market and whether the product category eventually expands beyond digital assets into commodities and other markets.
Also Read: CFTC Innovation Meeting Didn’t List Perpetuals on the Agenda—But Discussed Them All Day
