CFTC Chairman Mike Selig expects to approve perpetual futures contracts for crypto trading in the U.S. within the next few weeks, ending years of offshore dominance by exchanges like Binance and bringing a popular trading product back to American markets.

The Perpetual Problem

Crypto perpetual futures exploded offshore around 2017-2018 as U.S. regulators remained averse to the product despite its popularity. 

The main regulatory hurdle centers on how to characterize perpetuals under the Commodity Exchange Act, which originally only covered futures contracts and options before Dodd-Frank added swaps.

The debate focuses on whether perpetuals qualify as “contracts for future delivery” given their perpetual existence with no settlement date. 

This uncertainty forced U.S. exchanges to launch workarounds like Coinbase’s (NASDAQ:COIN) 50-year futures contracts that mimic perpetuals without technically being perpetual.

“We’re going to fix that,” Selig said. “We’re going to make sure that it’s possible to launch perpetuals here in the U.S., hopefully in the next handful of weeks to month, hopefully,” he added.

Starting With Crypto Only

The CFTC plans to start with crypto perpetuals before potentially expanding to other asset classes. 

Selig noted that perpetuals on traditional assets might drain liquidity from existing futures markets, so the agency will evaluate crypto first as a testing ground.

The product allows unique exposure to crypto assets without traditional settlement dates, letting traders maintain positions indefinitely while funding rates keep long and short positions balanced. 

This structure has made perpetuals the dominant trading product on offshore exchanges.

The SEC-CFTC Partnership

Selig emphasized that the CFTC and SEC are now coordinating closely through “Project Crypto,” a joint initiative to harmonize definitions, guidance, and regulatory philosophies. The agencies signed a memorandum of understanding to ensure consistent rules.

“For so many years, the agencies have not been able to cooperate, coordinate, work together,” Selig said. “We’ve wound up with this patchwork of rules and regulations that are often inconsistent.”

Under the prior administration, SEC Chair Gary Gensler led what Selig called “a war on crypto” with enforcement actions while the CFTC stood on the sidelines. 

The new approach focuses on working together to ensure U.S. markets remain competitive.

The Innovation Task Force

The CFTC launched an innovation task force focused on crypto, prediction markets, and artificial intelligence. 

The innovation advisory committee includes CEOs from both crypto firms like Coinbase’s Brian Armstrong and traditional exchanges like CME Group’s Terry Duffy.

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