Perpetual crypto futures: the CFTC dismantles the myth of 250x leverage

The Commodity Futures Trading Commission (CFTC), through its chairman Michael Selig, has recently clarified several controversies regarding perpetual crypto futures contracts, refuting some widespread criticisms especially about duration, leverage and operating mechanisms. These clarifications come at a time when the regulator is stepping up its role in the oversight of digital markets, while a public consultation is underway that has already collected over 100 comments from industry participants.

Key points

• Perpetual futures contracts do not require a fixed expiration date, according to CFTC legislation and interpretations.
• Leverage limits for perpetual futures regulated by the CFTC are the same as those applied to other futures products in the United States.
• The 2025 public consultation received more than 100 comments related to perpetual futures contracts.
• Funding rates help keep the price of perpetual futures in line with the underlying spot market.
• Concerns about the use of extreme leverage refer mainly to offshore platforms and not to those regulated by the CFTC.

CFTC clarifies the legal status of perpetual futures

One of the main controversies concerned the absence of a fixed expiration date in perpetual futures contracts, with some arguing that this excluded them from the traditional definition of futures in U.S. markets. Michael Selig clarified that neither the Commodity Exchange Act nor CFTC regulations require a fixed expiration in order to define a contract as a futures contract. Case law and the Commission’s interpretations are in fact more flexible, allowing contracts without a specific expiration to qualify as futures.

Leverage limits and corrections to misconceptions

Another frequent criticism concerns the hypothetical use of leverage up to 250x in perpetual futures, practices that according to Selig are not allowed in markets regulated by the CFTC. Contracts under its supervision comply with the same leverage parameters provided for all other U.S. futures, helping to contain systemic risks. Situations of extreme leverage are instead associated with offshore markets, far from U.S. oversight and standards.

Public consultation and the role of funding rates

In 2025, the CFTC launched a public consultation on the functioning of perpetual futures and the possibility of 24/7 continuous trading, collecting over 100 submissions from industry stakeholders, including many firms already registered with the Commission. This process demonstrates transparent interaction between the regulator and the market, aimed at developing a more effective and shared framework.

Another hot topic concerns funding rates, often accused of generating high costs and incentivizing harmful market behavior. Selig explained that these fees serve to keep the price of futures infused with market signals consistent with the spot value of the underlying assets, thus avoiding misalignments and helping to curb manipulation mechanisms. Overall, such costs tend to be comparable to the implicit costs in other types of traditional futures that need to periodically roll over contracts.

Broader CFTC activities in the digital sector

Beyond perpetual crypto futures, the CFTC has strengthened its internal structure with the recent appointment of Donald Battle, former advisor to the SEC’s crypto task force, as Chief Data Innovation Officer. Battle will bring advanced expertise in blockchain analytics, financial investigations and artificial intelligence, key tools to improve oversight of digital markets.

At the same time, the CFTC is involved in regulatory debates with the SEC, especially on the boundary of their respective competences in the regulation of digital assets. In addition, the Commission has taken legal action against restrictions imposed by state gambling laws on federal prediction market contracts, as in the case of its intervention in New Mexico against obstacles placed on contracts on Kalshi.

Finally, it should be noted that the CFTC is collecting public comments on a proposed regulatory framework for contracts linked to sporting events, an emerging sector that could expand within the field of sports prediction market platforms.

Why this clarity matters

Chairman Selig’s intervention serves to dispel misunderstandings that could negatively influence the perception and development of perpetual crypto futures in the United States, a rapidly evolving market that requires balanced and transparent regulation. The confirmation that these contracts do not need fixed expirations opens the door to more flexible instruments, while confirmation of compliance with leverage limits provides reassurance about risk control.

The direct involvement of market participants through public consultations represents a key strategy for building a participatory and robust regulatory ecosystem, capable of coexisting with the innovative and globalized nature of digital markets. In this way, the CFTC positions itself as a key player in the regulatory dialogue, seeking to define clear boundaries and shared rules with partners such as the SEC.

Content created with the assistance of artificial intelligence and with human editorial review.