Washington granted a license to perpetual contracts but seized their teeth.
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Washington granted a license to perpetual contracts but seized their teeth.
If onshore holdings continue to rise over the coming months, it will indicate that the compliance premium is indeed driving liquidity.
Navigating Web3 tides with focused insightsBy Xiao Bing, TechFlow
On May 29, the U.S. Commodity Futures Trading Commission (CFTC) approved Kalshi’s listing of a perpetual contract tied to the spot price of Bitcoin, ticker symbol BTCPERP. This marks the first time the U.S. regulatory framework has formally embraced the cryptocurrency industry’s most actively traded derivative. CFTC Chair Mike Selig hailed it as a “major step” and added it to Trump’s political ledger titled “Making America the World’s Crypto Capital.”
The news is significant—but what truly determines the success or failure of this move is the leverage cap.
In offshore markets, perpetual contracts draw appeal from their 40x leverage, permissionless access, and instant usability. Kalshi’s BTCPERP launches with leverage capped at roughly 10x. Selig set the tone for the entire regulatory framework in plain language: to “limit excessive leverage, volatility, and systemic risk.” So what Washington did on that day had two layers: one was inviting perpetual contracts into the regulated fold; the other was removing their most addictive feature—the high leverage—right at the door. Legalization and detoxification occurred simultaneously.
Let’s first clarify the nature of this approval. Kalshi received an official CFTC listing order—its contract references Bitcoin’s spot price and is classified and regulated as a futures contract, entering through the front door. On the same day, Coinbase received a different instrument: a “no-action letter,” permitting it to offer “covered” crypto perpetuals to U.S. customers via its affiliated offshore exchange Deribit—treated as foreign futures. One is listed domestically; the other opens a backdoor route overseas. Equating the two as “dual approvals” blurs the precise boundary regulators are willing to accept.
The claim of being the “first-ever in U.S. history” also requires discounting. As far back as December last year, under former Chair Caroline Pham, the CFTC granted Bitnomial a similar license. Kalshi’s blog post declaring itself the “first perpetual” is closer to marketing rhetoric than factual accuracy.
Why did regulators choose this moment to loosen restrictions? The answer may lie in the wildfire burning beyond U.S. shores.
Over the past two years, nearly all growth in perpetual contracts has occurred outside U.S. jurisdiction. According to CoinGecko, the world’s top ten perpetual exchanges generated approximately $92.9 trillion in trading volume in 2025—a 64.6% year-on-year increase. Even more striking is the context behind that growth: Bitcoin and major altcoins declined steadily throughout Q4 last year, while spot market losses mounted—and yet demand for leveraged directional bets surged. When spot trading fails to generate returns, perpetuals become the only reason gamblers stay at the table.
This force is called Hyperliquid. A decentralized exchange with no venture capital backing, no token presale, and 30% of its tokens airdropped directly to users, Hyperliquid now commands an estimated 70–80% share of on-chain perpetual trading volume, according to multiple data platforms. Its 30-day trading volume in April hit over $180 billion—leaving all other decentralized competitors far behind. It achieves this without holding a single dollar of user funds; its order book, matching engine, and liquidation logic all run entirely on-chain. A system with no headquarters, no shareholders, and no willingness to submit to traditional regulation has grown so large that Washington can no longer pretend it doesn’t exist—that is the real pressure forcing the CFTC to act.
So all questions converge on that leverage cap.
Selig is betting on compliance premium: bringing trading back onshore in exchange for transparent reference pricing, monitorable positions, and constrained leverage—to win back institutional and professional capital, and thereby reclaim pricing power over this market for the United States. Offshore players bet on the opposite: a compliant version slashed to one-quarter of the original leverage, coupled with KYC requirements and full surveillance, holds zero appeal for true high-frequency gamblers—who will remain firmly entrenched in the worlds of Hyperliquid and Binance.
In the two days following the announcement, Bitcoin hovered near $73,000, showing virtually no reaction to the approval. The market understands better than anyone that this is a structural development—not one delivering immediate price impact.
One detail deserves special attention: this entire framework was driven by a single person. Of the CFTC’s five-member commission, only Selig remains in office—and he alone possesses the authority to make binding decisions. This arrangement, inherently temporary and subject to reversal by the next administration, advances under the banner of political momentum. Its strength stems from that very fact—and so does its fragility. A door opened today by executive order can just as easily be slammed shut tomorrow by another.
So don’t rush to declare victory for either side.
Washington has drawn a line it’s willing to acknowledge: “You may enter—but only on our terms, and leverage stops here.” The onshore market will answer, over the coming months, whether it’s willing to cross that threshold—using position data as its vote.
What we must watch closely going forward is just one metric: the open interest in CFTC-regulated perpetual contracts. If onshore open interest rises steadily over the next few months, it signals that the compliance premium truly can pull liquidity back onshore. If it plateaus at an insignificant level, it means the market has voted with its feet: rules may bind exchanges—but they cannot control where leverage flows.
Until that curve delivers its verdict, the May 29 approval looks more like a probe than a triumph.
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