USA Trends and Developments Contributed by: Andrea S Kramer, ASKramer Law
Perpetual futures At present, the global crypto derivatives markets are dominated by perpetual futures (perps). By many accounts, perps have taken over the lion’s share of crypto’s global spot and derivatives markets. At the beginning of 2025, US participants had been closed out of the perp market, despite very strong interest; however, by April 2025, perp-style trading had begun on US DCMs. As the name suggests, perpetuals do not have matu - rity dates. They trade 24/7, are extremely leveraged, and buyers (longs) and sellers (shorts) can get into and out of their positions at any time with only margin being posted. In April 2025, the CFTC requested comments as to whether it should approve perps for trading on DCMs, noting that perps are “unlike traditional futures con - tracts, in which the price benchmarking between the derivative and the underlying cash commodity market is done at or around the expir[y] of the contract. Open exposures on perps may settle many times during the day or continuously with the payment based on fund - ing rates”, depending on the terms of a particular con - tract. Perps “use funding rates to maintain price parity with spot markets”. Responses to the CFTC from perp advocates focused on the importance of supporting American global competitiveness; improvements in liquidity and finan - cial stability; encouragement of innovation; reduction of weekend “gap risk”; “better” price discovery; and lowering rollover costs. Criticisms and concerns focused on the regulatory classification of perps as swaps, futures or another asset class entirely; sufficiency of operational readi - ness for 24/7 trading and clearing; support for mar - gining requirements; excessive contract leverage; and inability to manage defaults. In some respects, the CFTC’s outreach has been tac - itly addressed by recent market developments. While the CFTC’s comment period was still open, perp-style contracts started trading on US DCMs. Two CFTC- regulated DCMs – Bitnomial Exchange and Coinbase Derivatives – filed self-certifications with the CFTC for
trading perp-style contracts, and the CFTC did not “stay” certification of these contracts within the ten business days as required by law. As a consequence, we should expect to see a flood of these contracts in 2025. Prediction contracts Prediction contracts are binary (yes/no; win/lose) options that pay out based on the outcome of an event, such as a political event, sporting event or entertainment event. Prediction contracts are subject to CFTC jurisdiction. Before 2025, DCMs seeking to self-certify such contracts were consistently stopped by the CFTC. The CFTC relied on the Commodity Exchange Act (CEA) and CFTC rules that allow it to “stay” any contract listing “that involves, relates to, or references terrorism, assassination, war, gaming, or any activity that is unlawful under any state or federal law”, or that the CFTC determines is not in the public interest. However, in late 2024 when the CFTC denied a self- certified prediction contract for the US presidential election, the DCM – Kalshi – sued the CFTC to allow the listing. The CFTC argued that the contract was an illegal gaming contract, but the United States Dis - trict Court for the District of Columbia rejected the CFTC’s arguments. The court found that the contract was not illegal gaming because it did not incentivise criminal behaviour or manipulate election outcomes. The CFTC appealed. While on appeal, Kalshi started trading election contracts, and election contracts have been actively traded since early 2025. In May, the CFTC dropped its Kalshi appeal. While the CFTC appeal was still pending, the CFTC announced it would host a prediction contract round - table. With that announcement, the CFTC suddenly found itself in the middle of a passionate turf fight over Constitutional law, Indian Tribal sovereignty, fed - eral pre-emption, public interest objections, and state gambling and gaming authority. At present, election contracts, such as those addressed in the Kalshi case, are not gaming or sports betting. However, where do things stand with sports prediction contracts? Sports betting, where it is legal, is under the jurisdiction of state gambling commis -
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