What to Know

  • DRW CEO Don Wilson says perpetual futures are widely misunderstood and should not be defined by how some crypto exchanges have implemented them.
  • Wilson described perpetual futures as futures contracts without an expiration date, rather than inherently speculative crypto products.
  • He argued that high leverage, auto-deleveraging and continuous trading are exchange design choices, not required features of perpetual futures contracts.
  • Interest in bringing perpetual futures into regulated U.S. markets continues to grow as exchanges and market participants explore broader applications.
  • Kalshi recently submitted a proposal with regulators to expand its offerings to precious metals after seeing perps trading surge shortly after launch.
  • Wilson said real-time settlement and digital payment rails could improve margining and risk management compared with traditional daily clearing processes.
  • He argued that perpetual futures can reduce the need to roll expiring contracts, potentially lowering transaction costs, market impact and roll slippage.
  • Wilson urged regulators to focus on economic substance rather than legal labels, saying perpetuals are economically futures despite having no expiration date.

Perpetual Futures Debate Moves Beyond Crypto

Perpetual futures have become one of the most recognizable trading products in digital asset markets, but the debate around them is now moving well beyond crypto venues. DRW CEO Don Wilson has pushed back against the idea that perpetual futures are automatically high-risk gambling instruments, arguing instead that much of the criticism aimed at the product confuses the contract structure with the way some exchanges have chosen to run their markets.

Wilson framed perpetual futures, often called perps by traders, as futures contracts without an expiration date. In that view, the core innovation is not extreme leverage or exotic liquidation mechanics. It is the removal of the fixed maturity that forces futures traders to periodically close or roll positions from one contract into another. That distinction is becoming increasingly important as regulated U.S. markets, exchange operators and market participants examine whether perpetual futures can be adapted for assets outside the digital asset sector.

The issue is not merely academic. Perpetual futures have become central to crypto market structure because they allow traders to maintain directional exposure without managing a calendar of expiring contracts. At the same time, crypto exchanges have often paired the product with continuous trading, digital collateral systems and margin engines that operate in real time. Those features have shaped public perceptions of perps, particularly among regulators and traditional market observers who associate them with volatile digital asset speculation.

Wilson Separates Contract Design From Exchange Mechanics

Wilson’s central argument is that perpetual futures should be evaluated based on what they are economically, not based on the most aggressive market designs that have developed around them. He said many commonly cited features of crypto perpetuals have nothing to do with the contract itself. High leverage, auto-deleveraging and around-the-clock trading, in his framing, are implementation choices made by specific trading venues.

That distinction matters because a futures contract without an expiration date does not necessarily require any particular leverage model. It also does not require an auto-deleveraging system. Auto-deleveraging, often abbreviated as ADL, is a mechanism used by some exchanges to automatically reduce winning traders’ positions when losing traders cannot cover their losses. It is one of the most controversial features associated with crypto derivatives because it can affect traders who have managed their own positions profitably but are still exposed to the exchange’s loss-management process.

Wilson said he is not a fan of ADL and argued there is no reason it needs to be used for perpetual futures. That comment highlights a broader point: risk controls can be designed in different ways. A regulated market could list perpetual futures while rejecting certain crypto-native liquidation practices. Conversely, a crypto exchange could choose to combine perps with more aggressive leverage or nontraditional loss-sharing systems. In Wilson’s view, those choices should not be treated as defining characteristics of the product.

Real-Time Margining Could Change the Risk Conversation

A major part of Wilson’s case rests on the technological differences between traditional clearing systems and digital market infrastructure. Traditional clearinghouses generally calculate margin once a day, and market participants often have until the following business day to deliver additional collateral. Because prices can move materially during that interval, clearinghouses require relatively large initial margin buffers to protect the system.

Crypto exchanges such as Hyperliquid operate continuously, use digital collateral and can calculate margin requirements in real time. Wilson argued that digital payment rails create an opportunity to recalculate margin continuously and require collateral to be posted immediately. If a market can update margin demands as conditions change, the system may not need to rely as heavily on large upfront buffers to achieve the same level of protection.

That does not mean perpetual futures must come with more leverage. Wilson’s argument is more precise: real-time settlement can make margining more efficient, and a venue may then choose how to use that efficiency. Some exchanges could translate it into higher leverage. Others could use it to lower capital costs while keeping a conservative risk profile. The key point is that leverage is a business decision and a risk-policy decision, not an inherent feature of the perpetual futures contract.

This distinction is especially relevant for regulators assessing whether perps can fit inside established frameworks. If authorities view the product only through the lens of crypto’s most aggressive trading environments, they may focus on the wrong risks. If they examine the contract’s economic function separately from venue-specific mechanics, they may have more flexibility to design rules around margin, collateral, disclosure and default management.

Why Traders Value Perpetual Futures

The practical appeal of perpetual futures is straightforward. Traditional futures expire, meaning traders who want to maintain exposure must periodically roll their positions. Rolling can create transaction costs, market impact and roll slippage. It also introduces operational complexity, particularly for investors who want continuous exposure to the front of the futures curve.

Perpetual futures remove that recurring expiration cycle. A trader can maintain exposure without repeatedly shifting from one contract to the next. Wilson argued that this is the real innovation of the product. Instead of treating perps as a crypto-specific novelty, he described them as a market-structure tool that can support price discovery and risk management across a wider range of assets.

That argument helps explain why interest has spread beyond digital assets. Several exchanges and market participants have explored launching perpetual futures in regulated U.S. markets. Kalshi, after seeing perps trading explode shortly after launch, recently submitted a proposal with regulators to expand its offerings to precious metals. The proposal points to a broader question now confronting policymakers: should perpetual futures be confined to crypto, or can they be adapted for more traditional asset classes under regulated conditions?

Futures or Swaps: The Regulatory Label Matters

Wilson also urged regulators to focus on economic substance rather than legal labels. He argued that there is no reason to treat perpetual futures as swaps simply because they do not expire. In his view, they are economically futures, even though their lack of a maturity date challenges some conventional assumptions about futures market design.

The classification question is important because the regulatory treatment of futures and swaps can differ. If perpetual contracts are treated as swaps, they may face a different set of compliance expectations than exchange-traded futures. If they are treated as futures, regulators may need to determine how existing futures rules apply to contracts that do not expire and may rely on continuous settlement systems.

For market participants, the outcome could shape product availability, trading costs and the pace of innovation. For regulators, the challenge is to separate legitimate concerns from misconceptions. High leverage and poorly designed liquidation systems can create risk, but those concerns can be addressed directly through rules on margin, collateral, risk waterfalls and market surveillance. They do not necessarily require dismissing perpetual futures as an unsuitable product category.

A Broader Market Tool, Not Just a Crypto Product

Wilson’s comments arrive at a moment when the boundary between crypto market structure and traditional finance is becoming less rigid. Digital asset exchanges have tested models for real-time trading, collateralization and settlement that differ sharply from legacy systems. Some of those models carry risks, while others may offer efficiency gains that traditional markets could adapt.

Perpetual futures sit at the center of that conversation. They emerged as a defining crypto product, but their underlying purpose is not limited to digital assets. A contract that provides continuous exposure without expiration could be relevant for commodities, securities and crypto if implemented with appropriate risk controls. Wilson’s position is that regulators should not mistake the product’s crypto origins for its full economic potential.

The debate is likely to intensify as more regulated venues test the boundaries of what can be listed and how these contracts should be supervised. Market participants will be watching whether regulators focus on product labels or on the specific mechanics that determine risk. For now, Wilson’s message is clear: perpetual futures should be assessed as financial instruments that can be designed responsibly, not dismissed because of the reputation of some crypto trading venues.

Frequently Asked Questions (FAQs)

What are perpetual futures?

Perpetual futures are futures contracts without an expiration date. Traders use them to maintain exposure without having to roll from one expiring contract into another.

Why are perpetual futures controversial?

They are controversial because many crypto exchanges have offered them with features such as high leverage, continuous trading and auto-deleveraging. Wilson argues those features are exchange design choices rather than defining traits of the contracts.

What did Don Wilson say about high leverage?

Wilson said high leverage should not be viewed as inherent to perpetual futures. He argued that whether an exchange offers higher leverage is a business decision made by the venue.

What is auto-deleveraging?

Auto-deleveraging is a mechanism that can reduce winning positions when losing traders cannot cover their losses. Wilson said he is not a fan of ADL and argued that it does not need to be used for perpetual futures.

How could real-time settlement affect margin?

Real-time settlement can allow exchanges to recalculate margin continuously and require traders to post collateral immediately. Wilson argued this could reduce the need for large upfront margin buffers while maintaining protection.

Why do traders want contracts without expiration dates?

Contracts without expiration dates can reduce the need to repeatedly roll positions. That may help lower transaction costs, reduce market impact and limit roll slippage.

Are perpetual futures only for crypto?

Wilson argued they should not be viewed as crypto-only products. He said they could be used across commodities, securities and crypto as tools for price discovery and risk management.

Why does the futures versus swaps label matter?

The label matters because futures and swaps can face different regulatory treatment. Wilson argued that perpetuals are economically futures even though they do not expire.

What role does Kalshi play in the discussion?

Kalshi recently submitted a proposal with regulators to expand its offerings to precious metals after perps trading surged shortly after launch. Its move reflects growing interest in regulated perpetual futures beyond crypto.

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