TechFlow News, June 16: Mike Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), posted on X to clarify several market misconceptions regarding perpetual futures contracts and address recent controversy surrounding the CFTC’s approval of such contracts.
Selig stated that the Commodity Exchange Act and related CFTC regulations do not expressly require a “futures contract” to have a fixed expiration or delivery date. Because Congress has not explicitly defined the term, determinations of what constitutes a futures contract rely primarily on judicial precedent and CFTC interpretations—and a fixed expiration date is not a necessary condition.
Regarding claims that the CFTC-approved BTCPERP contract permits U.S. users to trade with 250x leverage, Selig emphasized that high leverage is not an inherent feature of perpetual contract structures but rather a characteristic of prior offshore trading platforms. Perpetual contracts subject to CFTC oversight will adhere to the same leverage limits applicable to other regulated futures products.
In response to concerns that the CFTC did not provide industry participants with opportunities for input and feedback, Selig noted that the CFTC issued a public request for comment in April 2025 on “perpetual contracts” and “24/7 trading,” receiving over 100 responses from industry participants—including multiple CFTC-registered entities. Additionally, addressing concerns that the funding rate mechanism imposes excessive costs and incentivizes undesirable market behavior, Selig pointed out that, after accounting for costs associated with opening positions and rolling over traditional term futures contracts, the annualized holding cost under perpetual contracts’ funding rates is broadly comparable to that of traditional futures. In fact, the funding rate mechanism helps anchor perpetual contract prices to the spot market and serves as a market discipline tool.
