Crypto’s favorite $90 trillion trading product is coming to Wall Street, but big banks are taking it slow

Perpetual futures, a highly popular trading product in the crypto market with an estimated annual volume of about $90 trillion according to Bank of America, are now entering regulated U.S. markets. These contracts differ from standard futures in that they do not expire and rely on periodic funding payments to maintain price alignment with the underlying assets. In late May, the Commodity Futures Trading Commission (CFTC) approved Kalshi and Coinbase to offer these contracts in the U.S., with Kalshi quickly surpassing $1 billion in trading volume within a week of launching its perpetual futures.

Despite this strong start, traditional Wall Street financial institutions are approaching perpetual futures cautiously. While smaller proprietary trading firms, market makers, and new clearing firms are more willing to experiment with these products due to fewer capital and reputational constraints, major banks remain hesitant. These banks face stricter regulatory requirements and must manage client obligations, which makes immediate large-scale adoption less likely. Instead, they prefer to wait for clearer regulatory frameworks, more robust liquidity, and proven infrastructure before committing significant resources.

The interest in perpetual futures is growing in part because these contracts allow 24-hour trading, unlike traditional futures markets that close during weekends when major global events can influence prices. This continuous trading capability could help traders better manage risk and provide valuable price discovery during market closures. However, liquidity during off-hours remains limited, and market depth is a concern for institutions seeking to avoid significant price impact from large trades.

There is also ongoing regulatory uncertainty around whether some perpetual futures should be classified as futures or swaps, affecting margin requirements, registration, and market participation rules. The regulatory debate has become competitive, with the CME challenging the CFTC's approach to Kalshi’s bitcoin perpetuals and concerns that incumbents may resist the product to protect their existing business lines. Overall, while Wall Street sees the potential in perpetual futures and regulators are facilitating their move onshore, the largest banks are expected to remain cautious and observant rather than aggressively adopting the product in the near term.