Kalshi, a prediction markets platform known for letting users wager on events from sports to weather, is pressing regulators for permission to expand its lineup of perpetual futures into new markets including metals, foreign exchange and energy, a senior company executive said.
Perpetual futures, frequently called "perps," differ from standard futures by lacking an expiration date. Traders can hold positions indefinitely rather than closing or rolling contracts. The structure also permits substantial leverage - sometimes reported as high as 50 times the contract value - which can amplify gains and losses.
The San Francisco-based platform launched the first U.S. perpetual futures for crypto in May after the Commodity Futures Trading Commission cleared the way for registered U.S. trading venues to offer such contracts. Kalshi now wants the regulator to permit perpetuals across a broader set of assets, the companys chief risk officer, Udesh Jha, told Reuters.
"Beyond crypto, the other asset classes that were looking at are very much driven by the market, for instance, things like gold," Jha said. He added that the companys user base "skews towards the retail side, but also institutional," and that gold is attractive because it is "retail friendly."
Jha said discussions with regulators are advanced and that Kalshi is exploring extensions of perpetuals into foreign exchange and energy markets as well. He also said the firm is considering perpetual futures linked to broad-based indexes and individual stocks, though he stressed that the company must determine how to enter most of those segments.
Kalshi reported that perpetual contracts have accounted for trading volumes of $16.1 billion on its platform since the products rollout. The firm also estimates that offshore perpetuals trading expanded to roughly $90 trillion last year, more than triple the prior years volume - a figure Kalshi uses to illustrate the market opportunity for bringing perps onshore.
Kalshis push to widen the scope of perps comes amid pushback from some corners of the derivatives industry. Critics warn the contracts can be risky for retail investors who may not fully understand their mechanics and could suffer major losses if prices move against leveraged positions. In June, CME Groups outgoing chief executive, Terry Duffy, described the CFTCs decision to permit perps as a "disaster waiting to happen."
Since the CFTCs approval, CME has filed a lawsuit against the regulator and its chairman, Michael Selig, challenging the decision to permit Kalshi and cryptocurrency exchange Coinbase to list perpetual futures. Observers saw that legal action as an effort to defend CMEs dominant position in the U.S. derivatives market, according to the reporting.
The initial CFTC approval and subsequent market reaction also prompted a near-term selloff in the equities of several major exchange operators. Stocks of top U.S. derivatives venues, including CME, CBOE, Nasdaq and Intercontinental Exchange, experienced notable declines on investor concerns that perpetual futures could disrupt traditional exchange business.
Regulatory review of perpetuals is ongoing in several areas. The CFTC has sought public input on potential expansion of perpetual contracts tied to delivered or storable energy commodities such as crude oil. A person familiar with the matter, who asked not to be named because the products are still under consideration, said trading of perps in other asset classes would be conducted during regular trading hours rather than around the clock if approved.
Jha emphasized demand drivers for Kalshis potential expansions, citing geopolitics and seasonality as factors that make FX, metals and energy particularly sought after by investors. He also noted that much of Kalshis current perpetuals volume has originated from institutional investors, even as the platforms participant base includes a significant retail component.
As Kalshi pursues regulatory clearances, traditional exchanges and market participants will be watching whether the firm can successfully adapt the perpetuals model beyond crypto while addressing concerns about leverage, market integrity and investor protection. The outcome of those regulatory discussions and the related legal challenge by CME will likely shape how widely perpetuals are adopted across U.S. markets.
Summary
Kalshi is seeking CFTC approval to offer perpetual futures - contracts without an expiration date - in asset classes beyond crypto, including gold, foreign exchange and energy. The platform launched the first U.S. crypto perpetuals in May and has reported $16.1 billion in perpetuals trading volume. The proposals have drawn industry criticism and a legal challenge from CME, while the CFTC solicits public input on perps tied to storable energy commodities.
Key points
- Kalshi aims to expand perpetual futures into metals, FX and energy, and is in advanced regulatory discussions.
- Perpetual futures allow indefinite holding and can involve high leverage, which raises retail investor risk concerns.
- Since launching perps for crypto, Kalshi reports $16.1 billion in related trading volume; offshore perps were estimated by Kalshi at $90 trillion last year.
Risks and uncertainties
- Regulatory approval is not guaranteed - Kalshi is still seeking permission to expand perps into new asset classes, affecting energy, metals and FX markets.
- High leverage in perpetual contracts can lead to outsized losses for retail traders and complicate market stability concerns, impacting retail brokerage and derivatives markets.
- Legal and competitive pressures from established exchanges, exemplified by CMEs lawsuit, introduce uncertainty about the long-term access and structure of perps on U.S. trading venues.