A360
Key Takeaways✦ Atlas AI
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Prediction markets are venturing into perpetual futures, a $61 trillion crypto derivatives market, aiming to bring these high-risk products into the regulated U.S. landscape for the first time.
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The move is seen as both defensive, to retain crypto-savvy users, and offensive, to challenge established exchanges like Coinbase and Robinhood on their own turf.
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Success hinges on navigating significant regulatory hurdles with the CFTC, particularly in managing the extreme risks of leverage and liquidation cascades that define offshore perpetuals.
Atlas AI
U.S. prediction markets Kalshi and Polymarket are reportedly preparing to offer perpetual futures, a financial instrument with over $61 trillion in annual trading volume, previously confined to offshore exchanges. This move signals a significant shift in the American derivatives landscape.
Perpetual futures, often called “perps,” function like traditional futures contracts but lack an expiration date. This structure, combined with leverage that can reach 100-to-1, has established them as the dominant vehicle for cryptocurrency speculation globally, accounting for over 70% of volume on centralized crypto platforms.
The introduction of these products by Kalshi and Polymarket represents a convergence of event-based wagering and high-stakes crypto derivatives. These platforms are challenging existing financial structures and blurring the lines between gaming and institutional finance within regulated American markets.
Regulatory Shift Paves Way for Onshore Derivatives
The history of perpetual futures is closely tied to regulatory arbitrage. These instruments were developed to provide continuous exposure to volatile crypto assets without the need for constant contract rollovers. They thrived on exchanges operating outside the reach of U.S. regulators, solidifying the dominance of offshore platforms in the derivatives sector.
In 2025, trading volume for these instruments surged to $61.7 trillion, a 29% year-over-year increase that surpassed the growth of spot crypto markets. This rapid expansion, particularly after a shift in the U.S. political landscape, has drawn the attention of domestic regulators concerned about a large, untaxed, and unsupervised market.
A pivotal change occurred in early 2026 when the Commodity Futures Trading Commission (CFTC) announced a new stance. Chairman Michael Selig indicated the agency's intent to use its authority to bring “true perpetual derivatives” onshore. This marked a new era of regulatory acceptance for products previously considered too risky for American markets.
Strategic Maneuvers and Competitive Landscape
For prediction markets, entering the perpetual futures space is a complex strategic decision. Analysts, including Dan Dolev of Mizuho, view this primarily as a defensive strategy. These platforms must cater to their crypto-native user base, who increasingly demand access to sophisticated products like perps. Failing to offer such products risks losing customers to other exchanges.
Conversely, established crypto players such as Robinhood and Coinbase face new competitive pressures from agile upstarts. Robinhood's partnership with Kalshi, which created a prediction markets hub that became its fastest-growing product line by revenue in 2025, illustrates this symbiotic relationship. However, as Kalshi enters traditional exchange territory, it could prompt Robinhood to accelerate the development of its own proprietary perpetual futures products.
Owen Lau of Clear Street notes the high barrier to entry, suggesting it will be challenging to attract dedicated crypto traders from established platforms like Coinbase. For traders, this development offers regulated access to a sought-after tool but also introduces significant risks. For the CFTC, it presents a high-stakes balancing act: capturing a multi-trillion-dollar market while implementing safeguards to prevent the instability that has characterized the offshore perpetual ecosystem.
Economic Implications and Risk Management
The introduction of regulated perpetual futures in the U.S. carries profound economic implications. It directly challenges the business model of offshore exchanges that have thrived on serving American customers. A successful onshore product could lead to a significant repatriation of capital, deepening U.S. financial markets and expanding the tax base.
The primary technical and economic challenge lies in risk management. Offshore perpetuals often rely on auto-deleveraging systems that can trigger liquidation cascades, where forced selling leads to further price volatility. U.S. operators will need to develop new frameworks for pricing, margin, and settlement that meet the CFTC’s standards for market stability.
The financial incentive is substantial. The rapid revenue growth from Robinhood's relatively small prediction market product demonstrates a strong demand for event-based trading. Perpetual futures represent a market several orders of magnitude larger, offering a lucrative new frontier if inherent risks can be managed within a regulated structure.
Lessons from Other Financial Instruments
The proposed introduction of perpetuals in the U.S. market mirrors the rollout of other high-leverage derivatives globally, particularly Contracts for Difference (CFDs). Popular in Europe and Australia, CFDs offer similar leveraged, non-expiring exposure to underlying assets. However, their high-risk nature led to their widespread banning for retail investors in the United States.
Regulators in jurisdictions allowing CFDs have imposed strict controls, including leverage caps, negative balance protection, and standardized risk warnings. The European Securities and Markets Authority (ESMA) intervened to standardize these rules after observing significant retail investor losses. The CFTC will likely examine these precedents when designing its own safeguards for perpetuals.
The U.S. experience with single-stock futures also provides a cautionary tale. Despite legislative authorization, the product struggled to gain traction, partly due to complex portfolio margining rules and a lack of organic demand from a retail base unfamiliar with the instrument. The success of perpetuals may depend on their appeal to a digitally native generation of traders already familiar with the product from crypto platforms.
