Perpetual Futures Explained: Crypto's Contract Comes to Kalshi

A standard futures contract has an expiration date, at which point it settles against the underlying asset's price. A perpetual contract has none. It stays open indefinitely, which raises an obvious problem: without an expiration to force the contract's price back in line with the underlying asset, what stops the two from drifting apart indefinitely.

The crypto exchanges that popularized the structure solved this with a funding rate, a periodic payment traders holding long positions and traders holding short positions exchange directly with each other, not with the exchange itself. When the contract trades above the spot price, longs pay shorts; when it trades below, shorts pay longs, creating a financial incentive that pulls the contract's price back toward spot without any settlement date to do the work.

The CFTC approved KalshiEX's BTCPERP contract on May 29, 2026, under Section 5c(c)(4) of the Commodity Exchange Act and Commission Regulation 40.3, finding it complies with the core principles required of any designated contract market. It was the first federally regulated perpetual contract in the United States.

Alongside the approval, the Commission issued a Policy Statement Concerning the Listing of Perpetual Contracts, acknowledging explicitly that the design 'may not be suitable for all asset classes' and directing market participants to submit any other perpetual contract for individual review under Regulation 40.3 rather than treating the bitcoin approval as a blanket precedent. That case-by-case posture is why each new asset class Kalshi has proposed since has required a fresh filing rather than an automatic extension.

Kalshi began trading gold and silver perpetuals the week of September 10, 2026, its first non-crypto use of the format, pricing the cash-settled contracts off Pyth Network feeds. The company has separate, still-pending filings for equity-index, copper, and currency perpetuals.

On September 18, 2026, Kalshi filed trading rules for perpetual futures on up to 58 large-cap US stocks, including Tesla, Apple, and Nvidia, that would trade continuously, including while the underlying equity markets are closed. Because futures on individual securities fall under both SEC and CFTC jurisdiction, the filing has drawn formal objection from Citadel Securities, which told both agencies on September 10 that a venue should not be able to choose its own regulator for an equity-linked product through unilateral characterization, and warned that CFTC self-certification could leave a surveillance gap around undisclosed corporate information.

On September 21, 2026, a quantitative analyst who goes by Beni on social media alleged Kalshi's ether perpetual contract showed $539 million in 24-hour volume against only $3.1 million in open interest, and that repetitive $5,500-sized trades accounted for as much as 58 percent of the contract's daily volume across four separate days, calling the pattern evidence of wash trading.

Kalshi's crypto lead responded that outside observers had conflated prediction-market data with perpetual-contract data, and that Kalshi's volume convention counts a contract's maximum potential payout rather than the cash a trader actually spent, the same methodology the company says Polymarket uses. Under that convention, a trader spending $30,000 on contracts with a $100,000 maximum payout registers as $100,000 in volume, a gap that can make headline figures look inflated without the underlying methodology attached.

No CFTC enforcement action has followed as of this writing, and Kalshi has said it does not run a crypto-specific rebate program of the kind the analyst's manipulation theory depended on. The episode does not resolve the underlying allegation, but it illustrates a real gap: the industry has no standardized convention for reporting perpetual-contract volume, which means the same raw number can support very different conclusions depending on which convention a given exchange uses.

Perpetual contracts are no longer a crypto-only curiosity inside a CFTC-regulated venue; they are becoming Kalshi's primary vehicle for expanding into commodities and, if the equity filings clear, individual stocks. Each expansion tests the same two questions: whether the CFTC's asset-by-asset review process can keep pace with the filings, and whether reporting conventions inherited from unregulated crypto exchanges hold up to the scrutiny a registered market invites.

For compliance teams at any exchange listing or considering a perpetual product, the practical lesson from the ETH-PERP dispute is that a volume figure is only as meaningful as the methodology behind it, and that methodology should be documented and ready to explain before an outside analyst, or a regulator, asks.