US regulators are opening the door to stock-based perpetual futures, extending a popular crypto trading product into traditional markets amid ongoing legal disputes.
Perpetual futures contracts tied to individual stocks can begin trading on regulated US exchanges for the first time, according to the Commodity Futures Trading Commission (CFTC), extending a derivatives product popularized in cryptocurrency markets into traditional equities.
CFTC Chairman Michael Selig said in a Tuesday statement that the contracts were deemed approved under CFTC Regulation 40.3 and could be offered on exchanges registered with both the CFTC and Securities and Exchange Commission (SEC) to trade security futures products.
Selig said bringing the products into regulated US markets would allow American traders to access perpetual futures under US regulatory safeguards rather than being “forced to turn to offshore, and often unregulated, venues.”
Perpetual futures allow traders to take positions on an asset’s price without owning the underlying asset or facing an expiration date. Crypto exchange BitMEX helped popularize the instruments, commonly referred to as perps, in 2016.
The announcement follows a wave of regulatory filings in September, when Coinbase, Kalshi and Kraken parent Payward, through its Bitnomial exchange, sought approval to offer perpetual futures tied to individual US stocks. OG.com joined the push days later, proposing contracts that could trade around the clock on weekdays.
The filings followed the CFTC’s May approval of Bitcoin perpetual futures contracts for Kalshi and separate regulatory relief allowing Coinbase to provide access to certain cryptocurrency perpetual futures listed on an affiliated foreign exchange.
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