CFTC Chair Moves to Correct Perpetual Futures Misconceptions

CFTC Chair addressed four key myths about perpetual futures contracts, clarifying leverage rules, public comment, and funding rates.

CFTC Chair Mike Selig took to X to address what he called circulating misconceptions about perpetual futures contracts. Selig posted a detailed thread, laying out four specific myths and countering each with factual clarifications. 

The post focused on the commission’s recent approvals of these contracts. Selig corrected the record and addressed several important matters related to the perpetual contract structure.

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CFTC Perpetual Futures Definition and Legal Basis

The first misconception Selig addressed concerned the Commodity Exchange Act itself. Critics argued the Act defines “futures contract” as requiring a fixed expiration or delivery date. Selig pushed back on that framing directly. 

According to Selig, neither the Act nor CFTC regulations provide an express definition for the term “futures contract.” 

He noted that Congress left the term undefined, meaning case law and commission interpretations supply the criteria. A fixed expiration or delivery date, he said, is not required under either.

The second myth specifically targeted BTCPERP contract approval. 

Critics claimed that the CFTC approved a contract that allowed US persons to use up to 250x leverage. Selig rejected that claim. He said extreme leverage is a hallmark of offshore venues where perpetual products have historically traded.

That feature, he stressed, is not inherent to the contract structure itself. CFTC-regulated perpetuals carry the same leverage limitations as other CFTC-regulated futures contracts.

Public Comment Process Behind CFTC Approval

A third misconception claimed the CFTC gave the industry no opportunity to comment on the perpetual contract structure. Selig disputed this directly. He said the commission issued a public request for comment in April 2025 covering both perpetual contracts and 24/7 trading. 

The CFTC received over 100 comments from a wide range of stakeholders. Many of the responders were CFTC-regulated registrants.

Selig’s clarification pushed back on the idea that the approval process lacked transparency or industry input. The comment period covered both structural and operational aspects of perpetual contracts. 

Funding Rate Mechanics and Market Discipline

The fourth myth Selig addressed concerned the funding rate mechanism. Critics suggested it imposes uniquely high fees on market participants and incentivizes bad behavior. 

Selig disagreed with that characterization. He said the annualized cost of carrying a comparable position in dated futures is roughly the same, once rolling costs are factored in. 

Rather than enabling misconduct, Selig described the funding rate as a disciplining feature. It keeps the instrument tethered to the underlying cash market, he explained.

Selig’s thread did not announce new policy changes. It focused entirely on setting the record straight around the perpetual contract structure and the commission’s recent approval decisions.

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