Perpetual futures push sets off clash between regulators and established exchanges

A United States push to bring offshore-style perpetual futures onshore is setting off alarms among established exchanges and market participants, who warn the novel crypto derivatives carry risks that existing rules were not built to handle.

Perpetual futures, known as perps, are derivative contracts with no expiry date that track an underlying asset's price and are hugely popular on offshore crypto platforms.

The commodities regulator opened the door to such contracts earlier this year, approving the first domestic bitcoin perpetual futures and signalling willingness to allow more, arguing the products can operate within its framework.

Established exchange operators have pushed back hard. One major exchange sued the regulator, arguing the contracts are swaps under financial reform law and fall outside the agency's approval powers, and seeking to void the approvals already granted.

The regulator has asked a federal judge to dismiss that lawsuit, contending the exchange has shown no concrete financial harm and describing the challenge as an attempt to stifle competition.

The outcome of the fight is expected to shape how the fast-growing crypto derivatives market is supervised in the United States and whether offshore trading volumes migrate onshore.