CFTC approves Kalshi perpetual futures, no-action letter for Coinbase
In brief
- CFTC approved perpetual futures for Kalshi; issued no-action position for Coinbase.
- Perpetual futures enable traders to speculate on crypto prices without owning assets.
- CFTC noted crypto markets suit 24/7 trading better than traditional markets.
- Coinbase CLO called the decision a 'massive first for the industry.'
Two paths, one direction
Perpetual futures contracts, or "perp" products, allow users to speculate on crypto prices without owning the underlying assets. Kalshi's approval came alongside Coinbase's no-action letter, which means the CFTC will not pursue enforcement action against the exchange for offering these products—but it's not the same as formal approval. Coinbase launched stock perpetual futures for non-US traders in March and has now cleared a path for crypto perps under the same framework.
Kalshi announced it would launch perpetual futures contracts on its platform as it moves closer to operating as a derivatives exchange. The CFTC's distinction between traditional and crypto markets underscores why it's willing to permit 24/7 trading in the latter. Derivatives referencing crypto assets may be well-suited for 24/7 trading due to their digital infrastructure and global reach—a rationale that doesn't apply to stock or commodity futures, which operate within fixed market hours.
Industry reaction and broader context
Coinbase chief legal officer Paul Grewal called the CFTC decision a "massive first for the industry." The move comes as CME Group announced 24/7 crypto futures trading, pending regulatory review. The CFTC's current leadership structure—with Michael Selig as chair and sole commissioner in a panel intended to consist of a bipartisan group of five people—means these decisions reflect a narrower consensus than a fully staffed agency would deliver.
What a no-action position means
A no-action letter is not an endorsement. It's forbearance. The CFTC is saying it won't sue Coinbase for offering perpetual futures, but the agency hasn't validated the product's safety or suitability for retail traders. Perpetual futures carry leverage risk and can expose retail traders to rapid losses. The CFTC's openness to these products doesn't erase the volatility and complexity inherent in leveraged crypto trading—it simply reflects a pragmatic view that digital-native markets operate differently from traditional exchanges.
Frequently asked questions
What's the difference between CFTC approval and a no-action position?
Approval is formal endorsement; a no-action position is regulatory forbearance. The CFTC approved perpetual futures for Kalshi outright, but issued a no-action letter for Coinbase, meaning the agency won't enforce against the activity but hasn't formally validated it. Both signal openness, but they carry different weight.
Why is the CFTC opening up to 24/7 crypto derivatives trading?
The CFTC distinguished between traditional and crypto markets, noting that derivatives referencing crypto assets may be well-suited for 24/7 trading due to their digital infrastructure and global reach. Traditional stock and commodity futures operate within fixed market hours, but crypto markets don't have the same constraints.
What are perpetual futures contracts?
Perpetual futures contracts, or 'perp' products, allow users to speculate on crypto prices without owning the underlying assets. They enable leveraged trading on price movements, which carries both opportunity and significant risk for retail traders.
