CFTC Chairman Backs: It's Time to Approve Regulated Perpetual Contracts

By: This article is an interview with CFTC Chair Michael Selig on CNBC Fast Money; translated by Golden Finance Claw

CNBC: What do you have to say to those opposed to perpetual futures?

Michael Selig: It's too late. We've already done this, and the facts are what they are. Incumbents are always afraid of the future, but we are looking forward. We see this product thriving overseas, and it has been around for a long time. Moreover, in the U.S., similar perpetual contracts have actually been listed for nearly a year.

It's now time to approve regulated, non-expiring futures contracts (which are perpetual futures).

Their trading methods are very similar to other types of contracts in our market, of course, they do not have an expiration date. This is advantageous for investors in many cases, as they don't have to roll over positions. We will ensure these products are available for trading and are well-regulated within the United States.

CNBC: A point raised by CME Group’s Terry Duffy is that perpetual contracts are not futures because they have no expiration date, and you have changed the definition of futures, altering the concept of “futures-like” in the Commodity Exchange Act — a law passed by Congress, which only Congress has the authority to amend. How do you respond? What grants you the authority to modify the definition of futures contracts?

Michael Selig: That is completely false. The Commodity Exchange Act does not define the term “futures contract.” Believe it or not, the law does not even use that term. The law refers to “forward delivery contracts,” a concept that has been interpreted by courts over many years. We also considered court interpretations. At the same time, the CFTC, as the regulator responsible for interpreting this law, has the authority to interpret this term in many contexts. Courts have considered various factors, including the concept of “futures-like”—but this does not necessarily mean the contract must have a fixed delivery date, termination date, or expiration date. It focuses on issues of future prices and future value. The U.S. has long had cash-settled derivatives contracts. These are cash-settled like other contracts, with daily funding payments, a funding rate, and daily payments from longs or shorts. So they are no different from other types of products in our market. Under the Trump administration, we in the U.S. are committed to bringing new derivatives into the regulatory framework, and this is just another example of delivering results for the American people.

CNBC: I understand you mentioned that perpetual futures contracts exist overseas. But recently, with the rise of prediction markets like Kalshi and Polymarket, has pressure increased? Are there more political pressures on your agency, perhaps because the Trump administration wanted to introduce these future products, or because Donald Trump Jr. serves as a paid strategic advisor to Kalshi and also advises Polymarket? Is there a connection?

Michael Selig: Such insinuations are simply laughable. This has nothing to do with prediction markets. We see that all major incumbent exchanges, nearly all incumbents and many new entrants, want to list this product. It’s more favorable for investors—they can keep their positions open without rolling contracts. This is nothing new or unique. We also see other participants listing similar products, so it’s not about Kalshi. Of course, they were the first platform approved for this product, but many others have been approved since, and we are willing and eager to work with all market participants interested in innovation, whether old or new.

CNBC: So just to clarify, there is no political pressure? Donald Trump Jr.’s involvement is completely irrelevant?

Michael Selig: That kind of insinuation is absolutely absurd.

CNBC: Does the approval of cryptocurrency perpetual futures contracts pave the way for other asset classes? Is your agency considering this?

Michael Selig: We are evaluating. From day one, I said we would take a multi-asset approach and not do a one-size-fits-all. Some assets are suitable for perpetual contracts, and we have been very clear about this in our guidance. We issued an interpretive rule on prediction markets or perpetual contracts and 24/7 markets, clearly stating this is not a one-size-fits-all approach. We will evaluate each asset individually; some products may be suitable, others may not. We will not force things into a new framework nor allow products that could cause regulatory issues. The premise of our approach is: we want market innovation, but responsible innovation. We want to ensure these new products fit within our regulatory framework. The standards and requirements we apply to these new products are consistent with those for other products. It’s not about forcing square pegs into round holes but about finding tailored rules and regulations to ensure these new products have the same controls and investor protections as other types.

CNBC: You mentioned investor protection, although protecting investors and ensuring product suitability are not entirely within the CFTC’s responsibilities, some might argue that perpetual futures are risky for ordinary investors—they may not understand how the funding rate mechanism works, such as the cost of holding the contract and how the funding rate erodes position value. Is this a concern, or does it entirely depend on consumers, investors, or traders deciding whether to enter perpetual futures?

Michael Selig: Today’s market already has various new products—zero-expiry options, swaps, various futures. This is just another type of new derivative tool. Of course, exchanges have a responsibility to disclose all information to traders. This is no different from any other product. I believe the idea that we should take a paternalistic approach and only allow one product because it’s easier to understand is itself a misconception, because options are of course very complex. These products are not particularly complicated if you look at the contract terms. So we will regulate them, ensure transparency of terms, and proper disclosure. Regarding suitability, of course, brokers must make judgments and assess their clients’ trading profiles.

CNBC: One last question, about potential future products. Michael, I’m curious—have you looked at platforms like Hyperliquid, especially their performance before SpaceX’s IPO debut? They predicted SpaceX’s first-day closing price very accurately. Does this give you insight into what types of products might actually be suitable?

Michael Selig: It demonstrates that innovation is happening worldwide. We want it to happen here. We see Hyperliquid and all these offshore platforms launching new products, and their accuracy in predicting IPO prices has impacted our markets. We see 24/7 crude oil contracts influencing the U.S. market. So we are certainly paying attention to offshore developments and recognize that offshore innovation may force us to accelerate.

Our approach is very sober—we recognize these products are available offshore, and if we don’t create a regulated pathway in the U.S., the market will move offshore. From day one, we made it clear that if we don’t seize this opportunity to establish a regulatory framework for new products—like cryptocurrencies, prediction markets, and innovative derivatives like perpetual contracts—these markets will develop offshore.

They may not develop in the U.S., but Americans will find ways to access them. They will definitely trade these products offshore because there is genuine demand. So we are excited to bring these products to the U.S. and ensure strong, sound regulation surrounds them.