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Kalshi’s Perps Pivot: Why Prediction Markets Are Becoming Derivatives Exchanges

As a researcher following the crypto markets, I’ve observed that US traders wanting to trade perpetual futures contracts usually had to use offshore exchanges, which came with risks related to who they were dealing with, legal uncertainties, and simply getting access. But that situation is now shifting – things are changing for US traders.

Now that regulations are becoming clearer for prediction markets in the US and a large exchange is starting to offer these types of contracts, investors are wondering if using a regulated exchange for perpetual contracts is safer, similar in performance, and cheaper than other options.

This guide explains the recent updates, clarifies the differences between perpetual contracts and event-based contracts, and outlines key considerations before investing.

Here’s a breakdown of what you need to know about Kalshi’s new crypto perpetual futures contract:

Key Approval: The CFTC gave the green light to Kalshi’s BTCPERP contract on May 29, 2026, establishing a regulated way to trade crypto perps within the U.S.

Huge Market: Perpetual futures contracts traded a massive $85.3 trillion in 2025, which explains why U.S.-based exchanges are starting to offer them.

Growing Institutional Involvement: Major trading firms are now active on prediction markets, suggesting that these platforms are becoming more liquid and easier to trade on.

Why This Matters: Trading perps on U.S. exchanges could simplify legal and security issues compared to offshore platforms, all while maintaining 24/7 trading and clear contract details.

Things to Keep in Mind: Perps are more complex than simple event-based predictions. Funding rates, margin requirements, and liquidation rules require updated risk management strategies.

Next Steps: Familiarize yourself with the contract specifications, test your trades, compare funding and fee structures, and carefully determine your position sizes to account for around-the-clock market volatility.

Core Concepts

As a researcher following the crypto markets, I kept getting the same question from US trading desks in early to mid-2026: when will we be able to trade crypto perpetuals legally within the US? The CFTC’s releases on May 29th finally provided some clear guidance they could work with. I observed that trading spreads on Kalshi narrowed as more systematic traders entered the market, and I even saw some broker-dealers quietly testing systems for around-the-clock risk management. The biggest challenge now isn’t regulatory, it’s operational – firms need to establish continuous funding, clearing, and surveillance processes. For teams that can handle that 24/7 cycle, onshore crypto perps are starting to look like a viable trading option, not just a news story. — Elliot Veynor

Traditionally, prediction markets deal with straightforward, all-or-nothing events. Perpetual futures are different – they follow a price that constantly updates without an expiration date. A funding rate keeps the contract price aligned with the actual price, which leads to ongoing profits and losses, and the possibility of margin calls or account closures.

It’s now official: Kalshi has been approved to offer Bitcoin perpetual futures contracts in the U.S. The Commodity Futures Trading Commission (CFTC) gave its approval on May 29, 2026, the same day Kalshi filed the necessary paperwork. Kalshi announced it will expand to offer perpetual futures on over a dozen cryptocurrencies, claiming to be the first U.S. company to do so.

The agency released instructions for its staff on how to classify certain cryptocurrency perpetual contracts as foreign futures. It also explained how to handle 24/7 trading and clearing, which are important considerations for any U.S. exchange looking to manage risk around the clock (according to a press release from the agency).

The timing of this change is due to the sheer size of the market. A recent CoinGecko report (2026 State of Crypto Perpetuals) shows that crypto perpetual exchanges handled around $85.3 trillion in trading volume in 2025 – a level of demand that onshore platforms can no longer overlook.

Key terms in this discussion

Perpetual future (perp) — A derivative with no expiry; price is kept near the index via periodic funding payments between longs and shorts.
Funding rate — A recurring payment that balances perp and spot; when the perp trades above the index, longs typically pay shorts, and vice versa.
Index price — A calculated reference from multiple spot markets; drives mark price and liquidations.
Initial/Maintenance margin — Capital posted to open and keep a position; falling below maintenance can trigger liquidation.
Liquidation — Forced position closure when margin requirements aren’t met; rules and penalties vary by venue.
Event contract — A binary payoff tied to an outcome (e.g., “Yes/No”); simpler risk than perps, but no continuous hedge profile.

Step-by-Step Playbook

Verify the rulebook. Read the CFTC Order, contract spec, and venue disclosures to know tick size, leverage, margin, and funding frequency before placing any trade.
Map liquidity. Check depth-of-book, maker-taker incentives, and who is quoting. Institutional presence can improve spreads, but verify during your active hours.
Stress funding scenarios. Compare historical funding versus spot-basis and CME futures to understand how carry could swing your PnL in trending or choppy markets.
Plan for 24/7 risk. Establish alerting, auto-deleveraging thresholds, and weekend capital buffers because liquidation can occur anytime.
Start with small notional. Test order types (limit, post-only, reduce-only), partial fills, and cancels to ensure your strategy behaves as intended.
Segment collateral. Separate trading collateral from long-term custody; avoid over-concentrating assets at any single venue.
Document everything. Keep trade logs, funding payments, and fees for portfolio accounting, tax reporting, and compliance reviews.

From Prediction Markets to Perps: What Changes

Traditional event contracts are simple – they finalize once the event happens. Perpetual contracts, however, require ongoing management: you make funding payments regularly, positions are constantly adjusted to reflect current market prices, and there’s a risk of margin calls. This represents a big change for those used to standard prediction markets, and it means exchanges need to monitor positions, process settlements, and manage funds 24/7.

As an analyst, I’m watching the recent regulatory developments closely, and the CFTC’s approval of Kalshi’s BTCPERP contract on May 29, 2026, is a significant step forward. The accompanying staff guidance addressing 24/7 trading and clearing provides valuable clarity. Kalshi is now planning to expand its offerings to include perpetual contracts for over a dozen cryptocurrencies, and they’re positioning themselves as the first U.S. company to do so – a claim they’re making directly.

The makeup of who’s trading is shifting too. Bloomberg noted that companies like Virtu are now active on Kalshi, suggesting that professional traders are joining as the platform offers more types of financial contracts, specifically derivatives.

Onshore vs Offshore Perps: Who Competes, Who Converges

The market for perpetual futures contracts, or ‘perp market’, initially grew on offshore exchanges, with an estimated $85.3 trillion in trading volume expected in 2025 (according to CoinGecko). Now, new exchanges operating within established regulatory frameworks are entering the market, hoping to attract traders by offering better compliance, more transparency, and easier integration with traditional financial systems. Here’s a breakdown of the main differences to consider.

As an analyst, here’s how I break down the key differences between onshore and offshore crypto derivatives markets. Onshore markets, like those approved by the CFTC, operate under explicit US regulation with product-level scrutiny. This means clear oversight and established rules. Access is generally straightforward, requiring standard KYC/AML procedures and potential integration with existing US financial systems. Clearing and operational policies are increasingly aligned with guidance for 24/7 trading, and we’re seeing liquidity improve with more market participants and tighter spreads. Contract details are transparent, with robust surveillance and disclosures. Funding mechanisms are similar to traditional finance, though it’s important to monitor the sources of the underlying indexes. Offshore markets, which aren’t registered in the US, fall outside US jurisdiction and are subject to varied local regulations. Access can be more challenging, often with geo-restrictions for US users requiring workarounds. While many operate on a 24/7 basis, the level of investor protection differs. These markets typically have deep liquidity pools and established market makers, but contract specifications can vary, and surveillance standards aren’t always consistent. They also benefit from mature funding markets with a long track record.

Here’s a helpful tip: When you’re choosing between venues, focus on the actual profit each one will generate. Calculate this by subtracting the expected costs (like basis) from the funding each venue provides. This way, you’re comparing how much money you’ll *actually* make, not just the initial fees.

Designing a Trade: Hedgers, Speculators, and Election-Season Vol

Perpetual futures contracts allow those looking to manage risk (hedgers) to maintain continuous control over their positions. For example, a US miner can sell Bitcoin perpetual futures contracts to offset their future production without having to constantly renew expiring contracts. Traders who speculate can create carry trades based on expected funding rates, but these trades can quickly reverse direction when significant news or events occur.

Three practical scenarios to model:

Spot-heavy portfolio hedge: Use a short perp overlay sized to beta and tolerance for liquidation risk. Stress-test 5–10% gap moves over weekends.
Funding capture: If funding skews positive for longs during risk-on, shorts may earn carry—but trending markets can erase gains. Cap leverage to survive adverse swings.
Event corridor: Around policy or macro data, spreads can widen and funding can whipsaw. Reduce position size and widen limits to avoid unnecessary liquidations.

No matter your trading strategy, it’s crucial to manage risk effectively. Specifically, use limit orders to minimize potential losses, avoid buying or selling when the difference between prices is large, and diversify your investments so you’re not overly exposed to assets that move in the same direction.

Pitfalls & Red Flags

Assuming perps are “just like” event contracts: Continuous funding and liquidation rules create very different risk dynamics.
Ignoring index methodology: Sparse or illiquid constituents can distort marks and trigger avoidable liquidations during volatility.
Underestimating 24/7 ops risk: Weekends and holidays still move markets. Build monitoring and capital buffers accordingly.
Overreliance on leverage: Cross-margin can magnify losses across positions; map contagion scenarios before sizing up.
Regulatory complacency: Interpretive/no-action positions can evolve; revisit compliance assumptions after new guidance.
Liquidity mirages: Quoted depth may vanish in stress; test market impact with small IOC/PO orders first.

For the latest news, in-depth analysis, and easy-to-understand explanations about perpetual futures (perps), regulations, and how crypto markets work, check out Crypto Daily.

Frequently Asked Questions

What exactly did the CFTC approve regarding Kalshi?

On May 29, 2026, the Commission approved KalshiEX, LLC’s BTCPERP perpetual futures contract. This decision establishes a regulated framework for crypto perpetual contracts in the United States. For more information, please refer to the CFTC’s press release.

How is a perp different from Kalshi’s traditional event contracts?

Event contracts pay out a set amount depending on whether an event happens, and you don’t need to worry about adding more funds. Perpetual contracts, or ‘perps’, don’t expire, adjust their price using funding rates to match an underlying index, and require you to actively manage your account balance to avoid potential forced closures.

Will onshore perps have the same liquidity as offshore venues?

As a researcher, I’ve been observing that while offshore markets generally have greater depth and size, liquidity isn’t fixed – it can shift around. I recently noted, through reports like those from Bloomberg, that firms like Virtu are now actively trading on platforms like Kalshi. This increased participation is a positive sign, potentially leading to tighter spreads and a more mature market for these products.

What changes operationally for a US venue offering perps?

Continuous, 24/7 risk management is now standard practice in the crypto market. The Commodity Futures Trading Commission (CFTC) recently provided guidance on how to classify certain perpetual futures contracts and what to consider when offering around-the-clock trading and clearing services (according to a CFTC press release).

Is Kalshi the first to offer perps in America?

When Kalshi first launched, it stated it was the first company in the US to offer perpetual contracts. However, this is how Kalshi describes itself – it’s not an official label from any government agency (according to a Kalshi press release).

What risks are specific to perps I should budget for?

Fluctuations in borrowing costs, changes to how benchmarks are calculated, rapid sell-offs when trading volume is low, and the challenges of operating markets around the clock all pose risks. Managing trade sizes and maintaining sufficient collateral are crucial for navigating these issues.

How big is the perp market and why does that matter?

As a crypto investor, I’ve been watching the numbers, and CoinGecko reports that exchanges traded around $85.3 trillion in perpetual futures contracts last year. That massive volume really explains why even traditional, regulated exchanges are starting to offer perps – they’re clearly responding to investor demand.

2026-05-30 14:44