On May 29, 2026, the Commodity Futures Trading Commission (“CFTC”) approved KalshiEX, LLC’s BTCPERP, a Bitcoin perpetual contract—a derivative with no fixed expiration date.[1] Chairman Michael S. Selig described the approval as “chart[ing]a path for one of the most liquid segments of the crypto asset markets to exist within the U.S. regulatory framework.”[2] Rather than create a new regulatory category, the CFTC applied its existing futures framework to BTCPERP.[3] Although commonly called “perpetual futures,” their elimination of fixed expiration dates distinguishes perpetuals from traditional futures in ways that complicate the application of the current futures regulatory framework.
Perpetuals are not new. While they have become a dominant form of crypto derivatives trading globally, the CFTC has acknowledged that uncertainty over their legal classification caused most of the market to develop offshore.[4] In April 2025, CFTC staff sought public comment on the characteristics, risks, and regulatory classification of these instruments.[5] The ensuing 2026 order created a domestic path for an existing offshore product rather than introducing a novel instrument.
What Makes a Perpetual Different?
Traditional futures expire on a set date, relying on that date to achieve convergence between the futures price and the price of the underlying asset.[6] Maintaining exposure after expiration generally requires traders to move into a later-dated contract, or “roll over” the position.[7] Perpetuals eliminate expiration dates, allowing for continuous exposure without repeated rollovers.[8] Instead, recurring funding payments between long and short traders help keep the perpetual price close to the underlying spot price.[9] When a perpetual trades above spot, long traders generally pay short traders; when it trades below spot, the direction can reverse.[10] These payments create incentives that narrow the difference between the two prices.[11] In this way, perpetuals reduce the transaction costs associated with repeated rollovers.[12]
That structural difference creates a distinct regulatory challenge. For traditional cash-settled futures, the CFTC treats manipulation risk as an “analysis of one moment in time,” because the reference price must be reliable only at expiry.[13] A perpetual, by contrast, requires a reliable reference “at every funding interval, without interruption, for as long as the contract remains active.”[14] Additionally, the CFTC has stated that perpetuals may present different issues depending on the underlying asset and that different asset classes may merit “independent analysis and review.”[15] Regulators must therefore evaluate both the continuing funding mechanism and the characteristics of the underlying market, rather than focusing mainly on a discrete settlement event.
The CFTC’s 2026 Approach
The BTCPERP order illustrates how the CFTC has applied the existing futures framework to perpetuals. Kalshi, a CFTC-regulated designated contract market (“DCM”), submitted the product under Regulation 40.3 for Commission review and approval.[16] The CFTC examined the contract’s terms, the Bitcoin market it referenced, and compliance with the Commodity Exchange Act (“CEA”) and the DCM Core Principles.[17] Specifically, DCM Core Principle 3 requires that listed contracts not be readily susceptible to manipulation.[18]
The order emphasized several features of the Bitcoin spot market. First, Bitcoin trades continuously, so the BTCPERP reference price can remain observable rather than depend on “stale or synthesized prices.”[19] Second, Bitcoin spot trading is deep and liquid, making it more costly for a trader with a large perpetual position to move the spot price around a funding or settlement calculation.[20] Finally, simultaneous spot and perpetual trading allows arbitrageurs to respond to price dislocations as they arise; the CFTC reasoned that a closed spot market could allow such dislocations to grow and trigger liquidations or distorted settlements before the market reopened.[21] The Commission therefore concluded that Bitcoin’s “deep, broadly distributed, active, and continuous” spot market supported BTCPERP’s design.[22]
The Commission limited that reasoning to BTCPERP and similarly structured perpetuals referencing Bitcoin or other digital commodities with “deep, active, and continuous” spot-market trading.[23] For perpetuals tied to asset classes outside the scope contemplated by the order, the accompanying Policy Statement states that Commission review under Regulation 40.3 is appropriate and encourages exchanges to seek such review.[24] Regulation 40.2, by contrast, generally allows a DCM to list a product through self-certification.[25] Under this process, the DCM may list a product after submitting the required materials to the CFTC, including an analysis of how the product complies with the CEA and the CFTC’s regulations, without first obtaining the CFTC’s approval.[26] The CFTC thus appears to be distinguishing among perpetuals based on the characteristics of the underlying market, while treating Regulation 40.3 as a recommended path for closer review rather than a mandatory procedure.[27]
A Contested Classification
While the order demonstrates the CFTC’s intent to regulate at least some crypto perpetuals as futures, that categorization faces legal challenges. On June 18, 2026, the Chicago Mercantile Exchange (“CME”) sued the CFTC and Chairman Selig, challenging both the BTCPERP order and the Policy Statement.[28] CME argues that crypto perpetuals fit the statutory definition of swaps, not futures, and must be regulated accordingly.[29] CME also alleges that the CFTC failed to explain its departure from earlier enforcement actions that treated offshore perpetual products as swaps.[30] The CFTC moved to dismiss on September 2, 2026, and CME filed its opposition on October 2.[31] The litigation remains pending.
An Already Expanding Framework
Meanwhile, additional digital-asset perpetuals have entered the CFTC’s futures framework. As of October 9, 2026, the CFTC’s product database lists certified perpetual futures from Crypto.com Derivatives North America, including Bitcoin, Ether, Solana, Sei, HYPE, and Zcash.[32] Crucially, those contracts were self-certified under Regulation 40.2 rather than approved by the agency under Regulation 40.3.[33] The filings show that additional digital-asset perpetuals have in fact proceeded through the ordinary self-certification process. At the same time, the Policy Statement recommends a review of Regulation 40.3 for perpetuals tied to asset classes outside the scope contemplated by the BTCPERP order.[34] Together, these developments suggest a differentiated approach, but they do not yet establish a clear rule for which product characteristics are sufficient for ordinary self-certification.
What to Expect
Two crucial questions remain. First, CME v. Selig may determine whether the CFTC may regulate perpetuals as futures rather than swaps.[35] Second, if perpetuals can be classified as futures, the CFTC must still determine which underlying market characteristics make a product suitable for 40.2 self-certification and which warrant Regulation 40.3 review. Moreover, if the agency’s classification survives judicial review and perpetuals continue to expand beyond highly liquid digital commodities, the CFTC’s current case-by-case approach will likely prove unsustainable and will require clearer baseline standards.
[1] See Commodity Futures Trading Comm’n, CFTC Approves BTCPERP Contract Submitted by KalshiEX, LLC, Release No. 9240-26 (May 29, 2026), https://www.cftc.gov/PressRoom/PressReleases/9240-26; see also Policy Statement Concerning the Listing of Perpetual Contracts, 91 Fed. Reg. 33,160, 33,161 (June 3, 2026), https://www.federalregister.gov/documents/2026/06/03/2026-11020/policy-statement-concerning-the-listing-of-perpetual-contracts.
[2] Michael S. Selig, Chairman, Commodity Futures Trading Comm’n, CoinDesk Op-Ed, What American Crypto Asset Perpetuals Mean for the Future of Crypto (May 29, 2026), https://www.cftc.gov/PressRoom/SpeechesTestimony/seligstatement052926.
[3] See Commodity Futures Trading Comm’n, Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1, at 33,161.
[4] Id.
[5] Commodity Futures Trading Comm’n, Request for Comment on the Trading and Clearing of “Perpetual” Style Derivatives 2–3 (Apr. 21, 2025), https://www.cftc.gov/media/12041/Perpetuals_RFC042125/download.
[6] See Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1.
[7] See Selig, supra note 2.
[8] Id.
[9] See Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1.
[10] Id.
[11] Id.
[12] See Selig, supra note 2.
[13] Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1, at 33,161.
[14] Id.
[15] Id. at 33,161 n.5.
[16] See CFTC Approves BTCPERP Contract, supra note 1.
[17] Id.
[18] See Commodity Futures Trading Comm’n, Order Approving KalshiEX LLC BTCPERP Futures Contract 1, 6–8 (May 29, 2026), https://www.cftc.gov/filings/documents/2026/orgdcmkexbtxperporder26601.pdf; 7 U.S.C. § 7(d)(3).
[19] Order Approving KalshiEX LLC BTCPERP Futures Contract, supra note 18, at 7.
[20] See id. at 7–8.
[21] See id. at 8.
[22] Id.
[23] Id. at 8–9.
[24] Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1; see also 17 C.F.R. §§ 40.2–40.3 (2026), https://www.ecfr.gov/current/title-17/chapter-I/part-40/section-40.2; https://www.ecfr.gov/current/title-17/chapter-I/part-40/section-40.3.
[25] See 17 C.F.R. § 40.2(a) (2026), https://www.ecfr.gov/current/title-17/chapter-I/part-40/section-40.2.
[26] See id.
[27] See Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1, at 33,161–62 & n.5.
[28] Complaint at 4–5, Chi. Mercantile Exch. Inc. v. Selig, No. 1:26-cv-02157 (D.D.C. filed June 18, 2026), https://www.courthousenews.com/wp-content/uploads/2026/06/cftc-kalshi-perpetual-contracts-lawsuit.pdf.
[29] See id. at 3; see also 7 U.S.C. § 1a(47).
[30] See id. at 5.
[31] See Chi. Mercantile Exch. Inc. v. Selig, No. 1:26-cv-02157 (D.D.C.), ECF Nos. 30, 45 (motion to dismiss filed Sept. 2, 2026; opposition filed Oct. 2, 2026), https://clearinghouse.net/case/48306/.
[32] Commodity Futures Trading Comm’n, Designated Contract Market Products (listing Bitcoin, Ether, HYPE, Sei, Solana, and Zcash perpetual futures submitted by Crypto.com Derivatives North America as certified on Oct. 8, 2026) (last visited Oct. 9, 2026), https://www.cftc.gov/IndustryOversight/IndustryFilings/TradingOrganizationProducts?Type=Future&col=Subcategory&dir=ASC&page=22.
[33] 17 C.F.R. § 40.2 (2026), https://www.ecfr.gov/current/title-17/chapter-I/part-40/section-40.2; 17 C.F.R. § 40.3 (2026), https://www.ecfr.gov/current/title-17/chapter-I/part-40/section-40.3; see also Commodity Futures Trading Comm’n, Listing Procedures, https://www.cftc.gov/IndustryOversight/ContractsProducts/ListingProcedures/index.htm.
[34] See Policy Statement Concerning the Listing of Perpetual Contracts, supra note 1.
[35] See Complaint, supra note 28, at 3, 5.
