Trump administration's embrace of "perp" futures sets off risk alarms for Wall Street stalwarts

The Trump administration's endorsement of offshore perpetual futures has stirred up apprehension on Wall Street, according to executives from established exchanges and other significant market players. These products, known as perps, operate continuously without expiration, allowing investors to hold positions indefinitely. Often leveraged up to 50 times, perps are primarily traded by retail investors using platforms like Binance and Hyperliquid, with a $61.7 trillion trading volume in 2025.

The U.S. Commodity Futures Trading Commission (CFTC) approved US-listed crypto perps in May, with Coinbase, Robinhood, and other fintech firms entering the new market. The CFTC Chair, Michael Selig, emphasized the importance of maintaining US oversight to protect American investors. However, the administration's support for crypto and prediction markets has sparked tensions with traditional Wall Street firms.

CME Group, a major futures market operator, sued the CFTC, contesting its classification of perps as futures, which allegedly downplays their risks. Additionally, a coalition representing Cboe Global Markets and Citadel Securities filed a lawsuit to reverse the CFTC's approval of equity perps. The CFTC has previously accused CME of using "lawfare" instead of competing in the new market.

The disagreement over market risks may escalate next year, as Democrats gain control of Congress and potentially intensify oversight of these young industries. CME's CEO, Terry Duffy, expressed concern that ambiguity in markets could harm business. Exchanges argue that perps should be classified as swaps, which face stricter margin, capital, and reporting requirements and are less accessible to retail investors.

However, the CFTC maintains that perps have futures-like features and that their funding mechanism substitutes for expiration.