CFTC Chairman Clarifies Four Misconceptions About Perpetual Futures Contracts

BlockBeats News, June 16, Commodity Futures Trading Commission (CFTC) Chairman Mike Selig published an article clarifying four misconceptions about perpetual futures contracts.

Myth of "Fixed Maturity Date": Some believe that the definition of a "futures contract" requires a fixed maturity or delivery date, and that the perpetual nature of the contract is inconsistent with congressional intent. Selig clarified that neither the Commodity Exchange Act nor CFTC regulations provide a specific definition of the term "futures contract," nor do they require a fixed maturity or delivery date. Since Congress has not defined the term, the criteria are provided by case law and Commission interpretation, neither of which require a fixed maturity date.

Myth of "High Leverage": Some believe that the CFTC approved the BTCPERP contract, which allows U.S. residents to use leverage of up to 250 times, violating its own rules. Selig clarified that extreme leverage has been a feature of trading on offshore venues since the inception of perpetual contracts, and is not inherent to the contract structure itself. CFTC-regulated perpetual contracts are subject to the same leverage limits as other CFTC-regulated futures contracts.

Myth of "Public Opinion": Some believe that the CFTC did not provide the industry with the opportunity to participate or express opinions. Selig clarified that in April 2025, the CFTC issued a request for comments on "perpetual contracts" and "24/7 trading," soliciting public feedback, receiving over 100 comments from a wide range of stakeholders, including many CFTC-regulated entities.

Myth of "Funding Rate": Some believe that the funding rate mechanism imposes a unique and prohibitively high cost on market participants, fostering market manipulation. Selig clarified that after considering the costs associated with holding dated futures contracts related to opening and rolling positions, the annualized cost of holding such a position is roughly equivalent to that of a perpetual contract. The funding rate mechanism is far from fostering malpractice but is a restraint tool to keep the contract in line with the underlying spot market.