PANews reported on June 16 that Mike Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), published an article on the X platform clarifying four common misconceptions about perpetual futures contracts.
- Regarding the misconception about “fixed expiration date”: Some argue that the definition of a “futures contract” requires a fixed expiration date or delivery date, and that the indefinite nature of perpetual contracts contradicts Congressional intent. Selig clarifies that neither the Commodity Exchange Act nor CFTC regulations provide a clear definition of “futures contract,” nor do they require a fixed expiration date or delivery date. Since Congress has not defined the term, the criteria for determination are provided by case law and committee interpretations, neither of which require a fixed expiration date.
- Regarding the misconception about “high leverage”: Some argue that the CFTC, in approving the BTCPERP contract, violated its own rules by approving a futures contract that allowed Americans to use leverage up to 250 times. Selig clarifies that extreme leverage is a characteristic of offshore trading 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.
- Regarding the misconception about “public comments”: Some believe that the CFTC did not provide the industry with an opportunity to participate or express its opinions. Selig clarifies that the CFTC released a draft for public comment on “perpetual contracts” and “24/7 trading” in April 2025, receiving over 100 comments from a wide range of stakeholders, including many CFTC-regulated registration bodies.
- Misconceptions about “funding rates”: Some argue that funding rate mechanisms impose unique and prohibitively high fees on market participants, encouraging unethical market behavior. Selig clarifies that, after considering the costs associated with opening and rolling over contracts with expiration dates, the annualized cost of holding comparable positions in futures contracts with expiration dates is roughly equivalent to that of perpetual contracts. Funding rate mechanisms are far from encouraging unethical behavior; rather, they serve as a constraint tool to keep the contract linked to the underlying spot market.
