CFTC chair Selig explains choice to authorize ‘perps’ in the U.S.

CFTC Chairman Defends Approval of Perpetual Futures

Michael Selig, the Chairman of the Commodity Futures Trading Commission (CFTC), spoke on CNBC’s “Fast Money” this past Monday regarding the ongoing discussion surrounding perpetual futures and defended the organization’s recent approval of the asset in the U.S.

Selig acknowledged that established companies often have concerns about new developments, but emphasized that the CFTC aims to ensure that products developed internationally can enter the U.S. market safely, adhering to strict regulations.

“The time has come to approve regulated futures contracts with no expiration date,” he stated. “We’re committed to making this product available, but it’s highly regulated here in the United States.”

In late May, the CFTC approved Kalsi, a prediction market platform, to offer Bitcoin Perpetual Futures (“PURPS”) without an expiration date. This allows traders to speculate on Bitcoin’s price without holding the asset itself. This approval is significant as it is the first instance of this asset class being allowed in the U.S., and Kalsi has extended its PERP offerings to include other cryptocurrencies as well.

Demand for these PERP contracts has surged. At a recent event celebrating the product, Kalsi reported that contracts in beta testing reached over $3 billion in notional value within just a week.

Following the regulator’s decision, CME Group CEO Terrence Duffy criticized the approval, expressing concern over the high leverage and associated risks. However, Selig addressed this viewpoint during his appearance on “Fast Money.”

“The notion that we should only allow one type of product simply because it’s more straightforward is, frankly, a misconception,” he noted. “Options are quite complex as well. We will work to ensure proper disclosures are made, and brokers must evaluate their clients effectively when trading in these markets.”

Kalsi’s CEO, Tarek Mansour, mentioned last week on “Fast Money” that the maximum leverage offered on PERP contracts (around 6x) is actually lower than what CME provides on some futures contracts.

Selig also refuted claims that the CFTC’s decision to approve these contracts was influenced by political pressure from the administration of President Trump, whose son, Donald Trump Jr., serves as a strategic advisor for Kalsi.