Wall Street veteran Don Wilson says regulators are getting perps all wrong

Don Wilson, CEO of DRW and a veteran of Wall Street, recently challenged common perceptions about perpetual futures, or "perps," in a series of posts on the social platform X. He clarified that perpetual futures are fundamentally futures contracts without an expiration date, and many features often associated with crypto perpetuals—such as high leverage, auto-deleveraging (ADL), and 24/7 trading—are actually specific implementation choices by some crypto exchanges rather than intrinsic aspects of the contracts themselves. Wilson emphasized that much of what people believe about perps is misleading because it conflates contract design with exchange mechanics.

Wilson's remarks come amid growing interest in introducing perpetual futures into regulated U.S. markets and discussions about their appropriate regulatory framework. He noted that while crypto exchanges like Hyperliquid operate continuously using digital collateral and real-time margin calculations—allowing for higher leverage and mechanisms like ADL—these are technological and business decisions, not necessary characteristics of perps. Wilson expressed opposition to ADL, stating there is no inherent need for it in perpetual futures.

He further explained that digital payment rails enable improved risk management compared to traditional clearinghouses, which assess margin once daily and require substantial initial margin buffers due to delayed collateral posting. Real-time settlement lets exchanges recalculate margin continuously and demand immediate collateral, reducing margin requirements while maintaining protection. The choice of leverage, therefore, is a business decision rather than a defining trait of perps.

Wilson described the core innovation of perpetual futures as eliminating the need for investors to roll contracts repeatedly, which reduces transaction costs and market impact while keeping positions aligned with the front of the futures curve. He urged regulators to focus on the economic substance of these contracts, arguing that treating perpetuals as swaps simply because they do not expire is misguided. Concluding, Wilson advocated for expanding perpetual futures across a broader array of markets—including commodities, securities, and crypto—not as a crypto-specific product but as a useful tool for price discovery and risk management.