CFTC Chair Supports: It's Time to Approve Regulated Perpetual Contracts

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

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

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

Now it’s time to approve regulated futures contracts with no expiration date—this is what perpetual futures contracts are.

Their trading works very similarly to other types of contracts in our market, and of course, they do not expire. In many cases, that’s beneficial for investors—they don’t have to roll positions. We will ensure these products are available for trading and are well-regulated within the United States.

CNBC: One argument raised by CME Group’s Terry Duffy is that perpetual contracts are not futures because they don’t have an expiration date, and you’ve changed the definition of futures contracts—altering the concept of “futurity” in the Commodity Exchange Act, which is a bill passed by Congress, and only Congress has the authority to amend. How do you respond? What gives you the power to modify the definition of futures contracts?

Michael Selig: That’s completely untrue. The Commodity Exchange Act does not define the term “futures contract.” Believe it or not, that term is not used in the bill. The bill uses the term “forward delivery contracts,” and the concept has been interpreted by courts over the years. We also rely on those court interpretations. At the same time, the CTFC Commission, as the regulator responsible for interpreting the statute, also has authority to interpret this term in many situations. Courts consider various factors, including the concept of “futurity”—but that doesn’t necessarily mean the contract must have a fixed delivery date, termination date, or expiration date. It focuses on future price and future value. The U.S. has long had cash-settled derivative contracts. Like other contracts, these are cash-settled, with daily funding payments and a funding rate, and either longs or shorts pay that rate every day. So they are no different from other types of products in our market. Under the Trump administration, the United States is working to bring new derivatives into the regulatory framework, and this is just another example of delivering results for the American people.

CNBC: I understand what you said about perpetual futures contracts existing overseas. But recently, with the rise of prediction markets—especially Kalshi and Polymarket—has the pressure increased? Is there more political pressure being brought to bear on your agency, perhaps because the Trump administration wants to introduce these future products, or maybe because little Donald Trump serves as a paid strategic adviser to Kalshi while also advising Polymarket? Is there a connection?

Michael Selig: Those kinds of insinuations are ridiculous. This has nothing to do with prediction markets. We see that all the major incumbent exchanges—almost all incumbents—and many new entrants want to list this product. That’s better for investors—investors can keep their positions open without rolling contracts. This isn’t new or unique. We also see other participants listing the same kinds of products, so it has nothing to do with Kalshi. Of course, they were the first platform to have the product approved, but since then many other platforms have also been approved. We’re willing and eager to work with all market participants who want to innovate, whether they’re new or established.

CNBC: So to be clear, there’s no political pressure at all? Any connection to little Donald Trump is completely irrelevant?

Michael Selig: That kind of insinuation is absolutely absurd.

CNBC: By approving cryptocurrency perpetual futures contracts, are you paving the way for other asset classes? Is your agency considering this?

Michael Selig: We’re assessing it. From the first day I said it—we’re going to review on a per-asset basis; we can’t do a one-size-fits-all approach. Some assets are suitable for perpetual contracts, and we’ve been very clear about this in the relevant guidance. We issued an interpretive rule regarding prediction markets, perpetual contracts, and 24/7 markets, and in that interpretation we clearly state that it’s not a one-size-fits-all approach. We will review each asset one by one—some products may be applicable, others may not be. We won’t force things into a new framework, and we won’t allow products that would create regulatory problems. The premise of the entire approach is: we want market innovation, but it must be responsible innovation. We want to make sure these new products fit within our regulatory framework. The regulatory standards and requirements we apply to these new products are consistent with those we apply to other products. This isn’t about forcing square pegs into round holes; it’s about finding tailored rules and regulations to ensure these new products have the same controls and investor protections as other types of products.

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

Michael Selig: Today’s market already has all kinds of new products—zero-expiry options, swap contracts, various futures contracts. This is simply another new derivatives tool in the market. Of course, exchanges have a responsibility to disclose all information to traders. This is no different from any other product. I think the idea that we should take a paternalistic approach—allow only one product because it’s easier to understand—is itself a misconception, because options are, of course, very complex. These products aren’t particularly complicated if you look at the contract terms. So we will regulate them, ensure the terms are transparent, and ensure appropriate disclosures are made. As for suitability, of course, brokers must make judgments and ensure they evaluate their customers in the market they’re trading on.

CNBC: Finally, one question about potential future products. Michael, I’m curious—have you looked at platforms like Hyperliquid, especially their performance before the SpaceX IPO debut? You saw that they predicted the closing price of Space’s first day of trading very accurately. Does that show you what kinds of products might actually be suitable?

Michael Selig: That demonstrates that innovation is happening around the world. We want it to happen here. We’ve seen Hyperliquid and all these offshore platforms launch new products, and the results show that they’ve been very accurate in predicting IPO prices, and they’ve also affected our markets. We’ve seen 24/7 crude oil contracts impacting the U.S. market. So of course we’re paying attention to what’s happening offshore, and we recognize that, due to these offshore innovations, we may need to move faster.

Our approach is very sober—we recognize that these products are available offshore. If we don’t create a regulated pathway in the United States, the market will move offshore. From day one, we made clear that if we don’t seize the opportunity to build a regulatory framework for new products—such as cryptocurrencies, prediction markets, and innovative derivatives like perpetual contracts—then 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 real demand. So we’re excited to bring these products to the United States and ensure strong, sound regulatory controls around them.