Crypto Industry Fires Back at CFTC’s Perpetuals Crackdown—Innovation or Insurrection?
Regulators swing the hammer—traders shrug and keep building.
When the CFTC dropped its latest guidance on crypto perpetual contracts, the industry didn’t just take notes—it rewrote the playbook. From DeFi protocols tweaking governance tokens to CEXs rolling out ‘compliant-ish’ products, the response has been equal parts defiance and adaptation.
Meanwhile, liquidity pools balloon as traders bet regulators are playing whack-a-mole with a hydra. (Spoiler: They are.)
And let’s be honest—since when has Wall Street ever needed permission to leverage up? At least crypto’s doing it with transparency… mostly.
Power and simplicity
"Bringing offshore crypto derivatives markets into the U.S. regulatory perimeter WOULD be a boon for U.S. markets and customers," Coinbase Derivatives wrote. The exchange noted perpetuals comprise "upwards of 90%" of crypto futures volume, surpassing even spot trading volumes.
The "simplicity" of perpetual futures makes it more accessible to retail participants, enabling them to gain Leveraged exposure "without the complications inherent in traditional futures products or spot crypto,” it added.
Research-driven crypto investment firm Paradigm, meanwhile, has urged the Commission to embrace decentralized trading protocols rather than limiting perpetuals to traditional exchanges.
"While perpetual contracts listed on registered entities are important, they are only the first and shallowest part of the pool that is perpetual contracts," Paradigm wrote last week.
Paradigm is also proposing the creation of a perpetual special advisory committee to examine DeFi perpetuals in hopes of leveraging "the power of smart contracts and blockchain technology" to "catalyze the transformation of our broader financial markets."
Transparency through tech
Hyperliquid Labs, the Core development team contributing to Hyperliquid, a custom Layer-1 blockchain, meanwhile, has outlined three core benefits of decentralized perpetuals.
First, transparency reaches unprecedented levels when every user action, including order placement, cancellation, execution, and liquidation, is "immutably recorded" and "publicly auditable," contrasting sharply with traditional systems where trade data remains proprietary.
Hyperliquid Labs suggests the CFTC examine how open architecture on blockchains promotes composability, allowing different protocols to interact and build together.
Composability encourages participants and developers to build a “wide array of applications and strategies to foster product and market innovation" and unlock new use cases, it added.
Hyperliquid Labs promoted self-custody, saying it allows traders to manage collateral in their wallets, reducing reliance on exchanges. This approach helps avoid risks and addresses concerns of "centralized intermediary failures, hacks, or fund mismanagement."
OKX, meanwhile, is touting perpetuals’ liquidity advantages, noting how they help consolidate trading volume that traditional futures fragment across multiple expiration dates.
"The lack of multiple expiry periods means perpetual futures can attract greater liquidity than traditional futures, particularly for far-dated expiries," OKX wrote, adding that perpetuals appeal to "options traders looking to hedge their exposure," as well as to "basis traders that are seeking arbitrage opportunities between exchanges."
The crypto firms’ comments come as the CFTC has signaled its intent to have crypto perpetuals "trading live very soon," according to outgoing CFTC Commissioner Summer Mersinger.
Edited by Sebastian Sinclair
