CoinDesk
Kalshi's launch of crypto perpetual contracts under CFTC oversight has triggered a public fight between derivatives veterans over a question regulators have sidestepped for years: are perpetuals futures or swaps? The exchange's Udesh Jha, head of exchange analytics, sat down with John Lothian News publisher John Lothian on The Policy Protocol to make the case that perpetuals belong in the futures bucket because they are exchange-traded, centrally cleared, and built to track spot markets. Lothian countered that the funding-rate mechanism — recurring bilateral cash flows between longs and shorts — makes perpetuals functionally closer to swaps than to traditional futures.
Why it matters
The classification is not academic. Lothian warned that labeling perpetuals as swaps could pull the product into a different regulatory regime and potentially restrict retail access unless Congress or the CFTC writes a new framework. Jha pushed the opposite direction: bringing perpetuals onshore, he argued, gives US customers a product that already generates trillions of dollars in offshore volume while adding the protections of a CFTC-supervised venue. How that question gets answered will shape customer protections, market structure, tax treatment, and the competitive gap between US and offshore crypto derivatives books.
Market impact
The manipulation question is the unresolved hinge. Lothian flagged that funding-rate calculation windows can give traders an incentive to push prices around settlement, exposing large positions to opportunistic flows — a critique long aimed at offshore perp venues. Jha's response was structural: Kalshi calculates funding continuously across each cycle rather than at a single closing print, which he said narrows the manipulation window. With US crypto derivatives still scaling and the CFTC yet to formally opine on the futures-vs-swaps framing, the debate is unlikely to settle with a single launch — every new product test will keep stress-testing the old definitions.
Frequently asked questions
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What is Kalshi's new crypto perpetual product?
Kalshi has launched crypto perpetual contracts under CFTC oversight. Perpetuals are derivatives that track an underlying asset's price and use a funding-rate mechanism to keep the contract tethered to spot, rather than expiring on a fixed date like traditional futures.
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Why is there a debate over whether perpetuals are futures or swaps?
John Lothian argues the recurring funding-rate cash flows between longs and shorts make perpetuals functionally similar to swaps. Kalshi's Udesh Jha counters that perpetuals are exchange-traded, centrally cleared and built to track spot, placing them closer to futures.
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How could the classification affect retail access?
Lothian warned that labeling perpetuals as swaps could pull the product into a different regulatory regime and potentially limit retail participation unless Congress or the CFTC writes a new framework. Treating them as futures keeps them inside the existing CFTC-supervised model.
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What manipulation risks did the debate identify?
Lothian flagged that funding-rate calculation windows can give traders an incentive to push prices around settlement, exposing large positions to opportunistic flows. Jha responded that Kalshi calculates funding continuously across each cycle rather than at a single closing print, which he said narrows that window.
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Why does this matter for US vs. offshore crypto derivatives?
Jha argued that bringing perpetuals onshore gives US customers a product that already generates trillions in offshore volume under CFTC supervision. The classification outcome will shape market structure, tax treatment and how competitive the onshore book can be against offshore venues.
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