CFTC chair: Regulated perpetuals subject to same rules as traditional futures

Following the U.S. Commodity Futures Trading Commission's (CFTC) recent issuance of a no-action letter permitting the conversion of expiring crypto futures into perpetual futures, Chairman Michael Cielak has moved to address market concerns and misunderstandings. In a post on X, he clarified the following points: Misconception: The U.S. Commodity Exchange Act defines futures as contracts with fixed expiration or delivery dates, a standard that perpetual futures do not meet. Fact: Neither the Commodity Exchange Act nor CFTC regulations explicitly define a "futures contract" or mandate a fixed expiration and delivery date. As Congress has not defined the term, the criteria for what constitutes a futures contract have been shaped by case law and CFTC interpretation, neither of which requires a fixed date as an essential element. Misconception: By approving BTCPERP contracts, the CFTC has allowed U.S. investors to use up to 250x leverage, violating its own regulations. Fact: The extremely high leverage often associated with perpetual futures is a feature of the overseas exchanges where these products first traded, not an inherent element of the perpetual futures structure itself. Perpetual futures regulated by the CFTC will be subject to the same leverage limits as any other CFTC-regulated futures contract. Misconception: The CFTC did not provide an opportunity for the industry to provide opinions or participate in discussions regarding the structure of perpetual futures. Fact: In April 2025, the CFTC issued a Request for Comment on "perpetual futures" and "24/7 Trading" to gather feedback from the industry and the public. The agency received over 100 comments from a wide range of stakeholders, including regulated entities. Misconception: The funding rate mechanism imposes excessive and high costs on market participants, encouraging market misconduct. Fact: When considering the costs of closing an existing position and re-establishing a new one as a traditional futures contract expires, the annual cost of maintaining a similar position is largely comparable to that of a perpetual future. The funding rate mechanism is not a device to induce misconduct but a core feature that keeps the perpetual futures price aligned with the underlying spot market price.