This morning, the Commodity Futures Trading Commission (CFTC) took a historic step to allow the listing of a true Bitcoin perpetual contract by a CFTC-registered exchange. In doing so, the Commission has charted a path for one of the most liquid segments of the crypto asset market to exist within the U.S. regulatory framework. Having true perpetual contracts in the United States is a major step in achieving President Trump’s goal of cementing America as the crypto capital of the world.
Unlike a traditional futures contract, which is designed for markets that close at night and on weekends, a perpetual contract (also called a “perpetual” or “perp”) is a type of derivative contract that does not have a fixed expiration date. Instead, counterparties periodically exchange a funding rate payment, similar to a variation margin, 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 price exposure without periodic expirations and without the costs associated with contract renewals.
Perpetual contracts were first theorized in a 1992 discussion paper by Nobel Prize-winning economist Robert Shiller. Since then, perpetuals have become a fundamental risk management and price discovery tool in global crypto asset markets.
Yet, despite clear market demand and the CFTC’s legal obligation to promote responsible innovation, the CFTC has failed – thus far – to provide a viable path for perpetual crypto assets to exist compliantly in the United States.
As a result, as might be expected, perpetual commercial activity occurred abroad. With liquidity fragmented across foreign platforms, U.S. crypto asset companies were at a competitive disadvantage and U.S. market participants were effectively blocked from accessing these markets.
Under my leadership, the CFTC took a different approach. A policy 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 clear regulation.
The Commission’s long-standing principled oversight of the commodity derivatives market will now include a practical framework for true crypto asset perpetual contracts. This is a framework that can limit excessive leverage, volatility and systemic risk, rather than moving these risks to unregulated locations.
Although the current approval of perpetual bitcoin may seem new, history tells a different story.
For more than a century and a half, U.S. commodity futures markets have functioned as a testing ground for innovation and evolved alongside technological progress. From agricultural futures in the 19th century to electronic trading in the 20th century to Bitcoin futures under Trump 1.0, our markets have constantly adapted to new forms of commerce, risk transfer, and capital formation. Crypto assets and blockchain-based financial infrastructure represent one of many next chapters in this story.
In my opinion, the question was never whether perpetual contracts on crypto assets would exist. Rather, the question was whether these measures would exist under American oversight, under American standards, and within the rule of American law.
For too long, bureaucratic regulators have approached finance’s new frontier on the assumption that innovation itself represents a threat to the public interest. This decelerationist approach resulted in regulation by enforcement 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 in favor of onshore perpetual crypto assets is a natural extension of this American success story and reinforces American 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 crypto assets to operate within its regulated framework. And while Congress has an important role to play in providing long-term statutory clarity to crypto asset markets, the CFTC will continue to advance initiatives related to tokenized collateral, crypto asset market structure, and prediction markets.
Innovation comes ashore.
American perpetual crypto assets are here, and the United States will continue to play a leadership role in this new frontier of finance.
