Perpetual futures are the biggest market in crypto — and until last week, they barely existed in the United States. The contracts let traders bet on bitcoin, ether or even individual stocks, with leverage, around the clock, and no expiry date at all. A funding rate — a small payment exchanged between buyers and sellers every few hours — does the job a settlement date does for an ordinary future. That structure has now crossed into regulated American markets: on November 3, the CFTC said perpetual futures on individual US stocks could begin trading on registered exchanges, and within hours an industry group backed by Cboe and Citadel Securities sued to stop them.

What a perpetual future actually is

A perpetual future — a “perp” — is a derivative contract that tracks an asset’s price without ever expiring. Buyer and seller exchange the difference between the entry price and the current price, and the position can stay open indefinitely as long as margin requirements are met. There is no delivery, no settlement date and no roll.

The idea predates crypto: economist Robert Shiller theorized perpetual-style contracts in 1993, and BitMEX launched the first bitcoin perpetual swap in 2016. Perps have since become the dominant crypto derivative, dwarfing dated futures and spot trading in daily volume.

The difference from the contracts most investors know is best seen side by side:

The funding rate: the anchor that replaces expiry

Without an expiry date, nothing would force a perpetual contract back toward the price of the asset it tracks. The funding rate does that job: a periodic payment exchanged directly between longs and shorts — not a fee kept by the exchange — usually settled every eight hours. The exchange compares the contract’s price with an index price built from spot markets. Above spot, funding turns positive and longs pay shorts; below spot, it turns negative and shorts pay longs. The payment makes the crowded side expensive to hold, pulling the contract price back toward spot, and arbitrageurs collecting funding payments speed the process along.

The payment is straightforward arithmetic:

Funding payment = position notional value x funding rate

Take a 1-bitcoin position worth $81,000. At the standard 0.01% funding rate per eight-hour interval, the long side pays $8.10 per interval when the rate is positive — about $24.30 a day, or 10.95% of the position’s value over a year (0.01% x 3 intervals x 365 days). At the 0.00789% rate seen on Binance on October 28, 2026, the same position paid $6.40 per interval, about $19 a day — 8.64% annualized. The rate resets every interval, so holding costs depend on how crowded the trade stays.

Three prices matter: the index price (reference spot, averaged across exchanges), the mark price (fair value, used for unrealized P&L and liquidation triggers), and the last traded price. When the mark price drifts from the index, funding pulls them back together.

Leverage, margin and liquidation

Leverage is why perps exist — and why they destroy accounts. It is the ratio between a position’s notional value and the margin posted: at 10x, $1,000 of margin controls a $10,000 position. A 10% move in the trader’s favour doubles the margin; a 10% move against it wipes it out, before fees and maintenance margin. At 100x, a 1% move is enough.

That is why liquidation, not price direction, is the main risk. When losses eat through margin below the maintenance level, the exchange’s liquidation engine closes the position automatically, at whatever price the market offers. In a fast market, forced selling pushes prices further and triggers the next round of liquidations. The cascade is the defining danger of leveraged crypto markets — and it has a recent, extreme example.

On October 10, 2025, a tariff announcement from the White House triggered the largest liquidation event in crypto history. More than $19 billion in leveraged positions were closed within 24 hours, according to CoinGlass data, with roughly 85–90% of them long positions and more than 1.6 million trading accounts affected. The trade was crowded: perpetual open interest stood at about $217 billion before the unwind and fell 43% to $123 billion by the next day, while single-day derivatives volume hit about $748 billion — roughly 2.8 times the 2025 daily average of $264.5 billion. The $19 billion liquidated equalled about 8.8% of all perpetual open interest. It was not the tariff headline alone that did the damage. It was the leverage underneath it.

How big is the perp market?

Perps are not a niche product. CoinGlass data put total crypto derivatives volume at about $85.7 trillion in 2025 — roughly $264.5 billion a day — and perpetuals account for the large majority of it. On-chain perps on decentralized venues recorded more than $630 billion in the month to November 3, 2026, per DeFiLlama data cited in industry reports — roughly $21 billion a day.

That scale is why regulators can no longer ignore perps — and why the fight over who offers them in the US has become a turf war between crypto venues, traditional exchanges and Wall Street market makers.

Perps come to America

For years, US traders who wanted perps used offshore venues — no regulated American exchange listed them. That changed in stages through 2026, after the CFTC’s no-action pilot for index perp-style contracts closed in October:

The legal fight is over a label. The CFTC treats equity perps as security futures, overseen jointly with the SEC. The challengers argue a contract with no expiry and no delivery obligation cannot be a security future at all — it is a security-based swap, which belongs to the SEC. The distinction decides the margin rules, the investor protections and who regulates the product: security futures carry a minimum margin of 15% of contract value under the joint CFTC-SEC rule in force since 2020, and Kalshi’s filings list maximum leverage of 4.9 times on its first single-stock contracts.

Trading has not waited for the courts. Kalshi began listing single-stock perps within days of the announcement, starting with Qualcomm, McDonald’s, Amgen and Costco, and its filing covers 58 contracts across 55 stocks. The SEC also retains a 60-day window to summarily abrogate the listing standards after they take effect — so even a court victory for the CFTC would start a second clock rather than end the story. We tracked the filings’ long wait in our November 2 report, when all four exchanges were still pending; a day later, the decision arrived by default, and the lawsuits arrived within hours.

The case for and against

The case for perps is that they are a better tool for the job: leveraged exposure without the roll costs of quarterly futures, positions held as long as needed, trading nearly around the clock. Bringing them onto regulated US venues, the CFTC argues, keeps American traders off offshore platforms with thinner oversight.

The case against is that the tool is dangerous in the wrong hands and disruptive in the wrong market. Leveraged, never-expiring exposure to single stocks, with funding payments that can turn against holders, is a long way from buy-and-hold — and October 2025 showed what happens when that leverage unwinds at once. The challengers add a market-structure worry: perps could divert trading from actual shares, weakening liquidity and price discovery in the underlying equities. The judge’s finding that the challengers are likely to win means the product’s legal footing is unsettled even as the first contracts trade.

Frequently asked questions

Do perpetual futures expire?

No — that is the defining feature. A position stays open as long as margin requirements are met; funding payments, not a settlement date, keep the contract’s price near spot.

Who pays the funding rate?

Whichever side is crowded. Above spot, longs pay shorts; below spot, shorts pay longs. Only positions open at the funding timestamp pay or receive.

Can you lose more than you deposit?

On most major venues, no: liquidation closes the position before losses exceed the margin, and insurance funds cover shortfalls when prices gap. But in extreme moves, liquidations can execute far below the expected price.

Are perps available in the United States?

They are arriving now, and the position is contested. Crypto perps traded offshore for a decade; the first US-listed bitcoin perpetual was approved in May 2026 and equity perps were deemed approved in November 2026 — but the approval is being challenged in federal court and the SEC has 60 days to intervene. Availability depends on the venue, the product and the litigation’s outcome.

Perpetual futures began as a crypto invention. A decade after BitMEX launched the first one, the same contract is now fought over by the CFTC, the SEC, Cboe, Citadel and the federal courts — because the question is no longer whether perps work, but whether they belong in the world’s largest stock market, and on whose terms.

This article is for informational purposes only and does not constitute financial advice. Market data are sourced from CoinGlass and CoinDesk Research; regulatory developments are drawn from the CFTC’s November 3, 2026 statement and related court filings as reported.