Wall Street’s interest in perpetual futures, a key derivative in the cryptocurrency market, is growing. However, major financial institutions, including banks, are taking a cautious approach despite recognizing the growth potential of this new market. They’re waiting for regulations, liquidity, and infrastructure to be fully established before diving in.
CoinDesk reported on Monday that perpetual futures have recently launched in the U.S., catching the attention of the financial sector.
Kalshi, a U.S. prediction market platform, saw its trading volume surpass 1 billion USD just a week after launching perpetual futures in June. This makes it the most successful product since the platform’s inception.
The company is now pushing to list perpetual futures with gold and silver as underlying assets. Coinbase, America’s largest cryptocurrency exchange, has also received regulatory approval to launch perpetual futures products.
Perpetual futures are derivatives without expiration dates, eliminating the need for investors to roll over contracts monthly or quarterly. Bank of America (BofA) estimates the global trading volume of perpetual futures at around 90 trillion USD annually.
Yet, Wall Street remains cautious. While U.S. regulators have sparked interest by bringing previously offshore-traded products into the regulated sphere, major financial institutions are still in the evaluation phase rather than jumping in headfirst.
Analysts predict that initial market participants are more likely to be market makers (MM) and startups rather than large banks. These entities can invest their own funds, allowing them to test the waters and take risks more freely.
In contrast, big banks face constraints from capital regulations, customer protection obligations, and reputational risks. They’re likely to delay significant market entry until the regulatory framework and market infrastructure mature sufficiently.
Industry experts believe perpetual futures could serve not just as speculative instruments, but also as effective hedging tools for risk management.
However, challenges remain. Liquidity is still thin on weekends, and ongoing legal debates about whether to apply futures or swaps regulations underscore the need for further regulatory clarity before the market can truly take off.