Perpetual Futures Enter Regulated U.S. Markets as Wall Street Giants Watch from the Sidelines
Taylor Wilson
U.S. regulators approved perpetual futures on regulated platforms this month, and Kalshi's bitcoin perps topped $1 billion in volume within a week — but major Wall Street banks are holding back, boxed in by compliance costs, thin liquidity, and an unresolved regulatory classification fight.
What are perpetual futures, and why are they suddenly in the U.S.?
A perpetual future — a futures contract with no expiry date — uses a periodic funding rate to anchor its price to the underlying spot price. This means → holders never need to roll contracts; they can keep a position open indefinitely.
These instruments have traded mainly on offshore crypto venues. Bank of America estimates global perps volume at roughly $90 trillion a year. In plain terms = perps are already the dominant trading tool in global crypto markets; they just hadn't entered the U.S. regulated system.
On May 29, the CFTC approved Kalshi to list bitcoin perpetual futures; Coinbase soon received its own approval. Kalshi's bitcoin perps hit $1 billion in trading volume within one week — the platform's largest product launch since prediction markets.
Why aren't the big banks rushing in?
The first movers will likely be proprietary trading firms and market makers — they trade their own capital, move fast, and can exit quickly if the economics don't work. Major banks face stricter capital requirements, client obligations, and reputational risk.
This means → at this early stage, the cost of building out compliance, clearing, and risk systems may exceed the potential revenue. The math doesn't yet add up for the largest institutions.
One industry participant put it bluntly: "Demand has to arrive first, then capital follows — institutions won't commit balance-sheet resources until client activity justifies it."
Beyond speculation — what else can perps do?
Traditional futures markets close for parts of the weekend, but geopolitical events, elections, and policy decisions don't wait for the opening bell. A 24/7 perpetual futures market lets institutions adjust positions the moment an event breaks.
This means → weekend perp prices could also serve as a pricing reference when CME futures reopen on Monday. In plain terms = perps fill a "weekend price-discovery" gap that traditional markets currently leave open.
Liquidity depth is the hard constraint. Round-the-clock trading doesn't mean institutions can move large positions without significant market impact; weekend liquidity remains thin, and collateral systems may not respond fast enough to match market pace.
Why does the regulatory classification fight matter most?
The core dispute: should certain perpetual contracts be classified as futures or as swaps? The answer directly determines margin rules, registration obligations, and who qualifies to provide liquidity.
CME has challenged the CFTC's regulatory treatment of Kalshi's bitcoin perps, arguing the contracts warrant different oversight. This reflects incumbent exchanges' competitive wariness toward new entrants — one industry insider noted that "a lot of this … is more commercially motivated than people publicly admit."
In plain terms = classification isn't just a legal question; it's a turf battle between existing exchanges protecting their business. Until this is resolved, major banks are unlikely to commit at scale.
Content is for reference only, not financial advice.