Perps come onshore

On May 29, the CFTC opened the door to regulated crypto perpetual futures — "perps" — onshore in the United States. And the first venue through it was not a crypto exchange. It was Kalshi, the company that built the leading federally regulated event-contract exchange, listing a regulated perpetual on Bitcoin.¹ A prediction-market venue just became a crypto-derivatives venue, with the same regulator's blessing, in a single move.

If you've been reading this series, that should land with a particular weight. For twenty parts I've argued that prediction markets are running the crypto-exchange playbook again: the US legitimizes a grey-zone derivative, and the first licensed venue runs away with it. Late May is the moment that thesis stopped being about prediction markets and became about something larger — a regulated-derivatives platform that happens to have started in event contracts.

What a perp actually is

Start with the product, because the name is doing a lot of work. A perpetual future is a derivative that tracks the price of an underlying asset — Bitcoin, say — with two features that an ordinary futures contract doesn't have. First, no expiry: a normal future settles on a fixed date, but a perp never matures, so you can hold the position indefinitely. Second, a funding rate: a small payment that flows between longs and shorts at regular intervals to keep the perp's price tethered to the spot price.²

The funding rate is the clever part. With no expiry date forcing convergence, what stops a perp's price from drifting away from spot? Money does — the same answer as everywhere else in this series. When the perp trades above spot, longs pay shorts; when it trades below, shorts pay longs. So holding the rich side costs you and holding the cheap side pays you, and that asymmetry pulls the contract back toward the underlying. Write the long's per-interval payment as the position size times the gap, and you get the mechanism in one line:²

where \(N\) is the notional, \(f\) sets how hard the tether pulls, and the sign of \(P_{\text{perp}} - P_{\text{spot}}\) decides who pays whom. It's a price-keeping feedback loop, not a settlement date — the contract stays honest the same way a market does, by making the wrong side bleed.

And here is the part to be blunt about: a perp is a leveraged instrument. Traders post a fraction of the notional as margin and control a much larger position, which means gains and losses are both magnified — and if the price moves against you past your margin, you're liquidated and the position is gone. Perps are the single most-traded product in all of crypto, and they are also where retail traders most reliably blow up. Leverage cuts both ways, and offshore it has mostly cut against the people using it. None of the playbook logic below changes that. A regulated perp is still a leveraged bet, and a leveraged bet on a volatile asset is a fast way to lose money.

Why they've always traded offshore

Perps weren't invented last week. They have been the dominant instrument in crypto for years — the bulk of all crypto trading volume is perpetual futures, not spot — and almost all of it has happened on offshore venues like Binance, outside the US regulatory perimeter.³ American traders who wanted leverage on Bitcoin either went without or routed around the rules to reach an exchange in a friendlier jurisdiction. Sound familiar? It's the exact shape event contracts had before 2020: a product that plainly worked, enormous demand for it, and no legal way to offer it onshore at scale.

That's why May 29 matters beyond crypto. The CFTC did to perps what it did to event contracts in 2020 — it answered the question of what the thing legally is, and opened a door to offer it onshore under supervision. The grey zone gets a licensed version. The largest derivative in crypto, which lived its whole life offshore, now has a regulated US address.¹

The same playbook, a new product

I drew the prediction-market playbook in five moves in Part 13, and traced the 2020 event-contract decision in Part 11. Lay the perps story on top and the tracks are parallel to the point of being eerie. A grey-zone derivative, traded mostly offshore. A US regulator — the same CFTC — that decides to legitimize it. And then the race to be the first licensed venue to capture it onshore, where, as always in exchange businesses, liquidity compounds and the early licensed leader is hard to dislodge.

The move that should make you sit up is Kalshi's. A company that built the first regulated event-contract exchange just extended into a completely different derivative — leveraged crypto futures — under the same regulator, on the same rails, the moment the door opened. That is not a prediction-market company adding a feature. It's a prediction-market company revealing what it always was: a licensed-derivatives platform whose first product happened to be event contracts.

This reframes the whole thesis. The license was never a permission slip for one product. It's a standing relationship with a regulator and a piece of supervised infrastructure — and once you hold it, each new asset class the CFTC blesses is a product you can add, not a venue someone else gets to build. Event contracts were the first thing through the door. Perps are the second. The interesting question is no longer "who wins prediction markets" but "who holds the licensed venue that the next several derivatives flow through."

Event contracts, perps, and whatever's next

Picture the endgame the playbook implies. A single CFTC-regulated exchange listing event contracts and perpetual futures and traditional dated futures — different products, different risk profiles, one license, one order-entry system, one surveillance stack, one pool of trust. That is not a prediction-market startup anymore. That is a broad regulated-derivatives exchange, which is exactly the shape the crypto-exchange playbook was always pointing at. Coinbase didn't stay a place to buy Bitcoin; it became a regulated venue for an expanding menu of products. The event-contract venues are walking the same path, and perps are the first visible step.

This is also why the timing rhymes so well with the category's other milestones. By April, combined monthly volume across the leading event-contract venues was running around 24 billion dollars; Kalshi, the regulated leader, was valued near 22 billion after its March round; and the Intercontinental Exchange — the owner of the New York Stock Exchange — had finished committing up to 2 billion dollars to Polymarket for its event data.⁴ A category that big, growing that fast, with that caliber of institution circling, was always going to attract the next regulated product. Perps are it. They won't be the last.

What's hard about this

I want to be honest about the ways the optimism above could be wrong, because "perps came onshore" is a real event, not a finished story.

Perps are leverage, and leverage hurts retail. This is the first and biggest caveat. The whole appeal of a perp is magnified exposure, and magnified exposure means magnified losses and liquidations. Offshore, leveraged crypto trading has been an efficient machine for transferring money from inexperienced retail traders to the house and the sharks. Bringing it onshore adds segregation, surveillance, and disclosure — genuinely better guardrails — but it does not repeal the math. A regulated perp is still a leveraged bet on a volatile asset, and most people who use leverage on volatile assets lose. Legitimacy is not safety.

The offshore incumbents are enormous. The licensed onshore venue is starting from roughly zero against perps markets that have spent years building the deepest liquidity in all of crypto. In an exchange business, liquidity is the product, and the offshore books are vast. Being regulated-first is an advantage with US institutions and cautious users — the same edge that worked for Coinbase — but it is not a guarantee against incumbents who already have the order flow and will not cede it quietly.

The regulatory perimeter is still being drawn. "The CFTC opened the door" is the start of a rulemaking, not the end of one. Exactly which perps, at what leverage, for whom, under what margin and disclosure regime — all of that is still being worked out, and it can tighten. Election contracts were litigated for years after they were first allowed; there's no reason to assume perps will be cleaner. What's permitted in late May could look different by year-end.

Here's the one honest line about why I find this clarifying for what I'm building at Seeker. We've always treated the bet as license-per-market — win the right to operate inside the rules, one jurisdiction at a time, and let the liquidity compound. Perps coming onshore widen that bet in a way I didn't fully price in: the licensed venue isn't just defensible across geographies, it's extensible across products. The same regulated rails that list event contracts can list the next derivative the regulator blesses, and the one after that. That's more reason the licensed venue compounds, not less. To be exact about status, as always: the license is the goal, not a thing we hold — the MVP and demo are live, and the interesting work is earning the rest.

Strip the company out of it and the pattern is the real story. A grey-zone derivative gets legitimized in the US; the first licensed venue captures it onshore; and the venues that win turn out not to be product companies but regulated platforms that keep adding products. We watched it happen with crypto exchanges. We're watching it happen with event contracts. On May 29, with perps, we watched the two stories become one. The license was always the asset. The product is just whatever comes through the door next.