Perpetual futures have spent years as one of crypto’s most popular trading products, especially for investors outside the United States. Now that the contracts are entering regulated US markets, Wall Street is trying to decide whether they are a passing retail fad or a permanent threat to traditional futures.
The early data is hard to ignore.
Kalshi’s perpetual futures topped $1 billion in trading volume within a week of its launch in June, making it the company’s biggest product debut since prediction markets. The exchange has since sought regulatory approval to offer perpetual futures linked to gold and silver, a sign that the product may not be limited to Bitcoin (BTC) and other digital assets.
Perpetual futures, often called perps, are similar to standard futures contracts but do not expire. Traders do not need to close or roll over a position to a new contract every month or quarter. Instead, periodic funding payments help keep the contract price close to the underlying asset.
The product has become a core part of global crypto trading. Bank of America estimates annual perpetual futures volume at approximately $90 trillion.
On May 29, the Commodity Futures Trading Commission (CFTC) gave Kalshi approval to offer contracts. Coinbase (COIN) also gets approval to list regulated perpetual futures in the US
However, inside Wall Street, interest does not mean immediate adoption.
People familiar with the discussions said the irregularities are coming to light more frequently, partly because U.S. regulators are allowing markets that once operated offshore to operate. Yet most large financial institutions are still studying products rather than preparing for a big launch. The first movers are more likely to be proprietary trading firms, market makers and new clearing firms.
Unlike big banks, prop shops trade their own capital. This gives them more freedom to test new locations, accept operational risk, and withdraw if the economics stop working. Large banks face strict capital regulations, customer obligations and reputational risk. For them, the profits available in a young market cannot yet justify the costs of building compliance, clearing and risk systems around it.
This distinction matters because the phrase “Wall Street” covers many groups operating at different speeds. Individual traders and small companies often arrive first. Market makers follow suit as volume increases. Banks typically want years of data, clear regulatory practices and stable infrastructure before committing large sums.
Still, potential use cases go beyond speculation. Perps can help traders manage weekend risk. Traditional futures markets close for part of the weekend, even when wars, elections, and policy decisions do not occur. Traders with options exposure on Friday may have to wait until Sunday night to avoid a sharp move.
A 24-hour liquid continuous market could change this. Companies can adjust positions as events unfold, then use weekend prices to predict where CME futures might reopen. Insiders said this could make perps useful as both a hedge and a source of price discovery.
“There has to be demand, or there won’t be capital,” said one industry insider, arguing that companies won’t build balance sheets unless customer activity justifies it.
The problem is depth. A contract may trade around the clock, but that does not mean institutions can move large positions without moving the market. Weekend liquidity remains low, and collateral systems do not always move as quickly as the markets they support.
A regulatory battle is also shaping up. A key question is whether some perpetual contracts should be treated as futures or swaps. This difference affects margin rules, registration duties and who can provide liquidity. Industry insiders said these legal questions could become more important as exchanges push investors into commodities, equities and other traditional markets.
This debate is also becoming competitive. CME has challenged the CFTC’s treatment of Kalshi’s Bitcoin perpetuities, arguing that the contracts should be regulated differently. Similar controversies could emerge if exchanges seek continued expansion into equities and other asset classes.
Another industry insider said, “A lot of this stuff… is more commercial than people care to admit out loud,” suggesting that some of the opposition reflects concerns about market structure as well as protecting existing businesses.
For now, Wall Street’s outlook is cautious rather than hostile. Trading companies see a product they understand, regulators see a market taking off, and exchanges see an opportunity to capture new volume.
But the largest banks are unlikely to lead the way. They will wait for regulations, liquidity and infrastructure to catch up.