CFTC Chair Michael Selig Defends US Approval of Crypto Perpetual Futures Traders

CFTC Chair Michael Selig Defends Approval of Perps Trading in the US

The fight over perpetual futures, or “perps,” is heating up in Washington, and CFTC Chair Michael Selig is making the case that the US should stop pretending these markets can be kept outside its borders.

• Perps are high-risk crypto derivatives with no expiry date.
• Selig argues US approval can boost competitiveness and oversight.
• Critics warn leveraged trading can wipe out retail users fast.
• The real battle is regulated access versus offshore chaos.

Perpetual futures are a type of derivative that lets traders bet on the price of an asset without owning it. Unlike standard futures contracts, perps do not expire. That makes them popular in crypto, where traders can use leverage — borrowed trading power that lets them control a larger position with a smaller amount of capital — to amplify gains and losses.

That same feature is why perps are loved by market pros, liquidators, and the most overconfident degens in the room. They are fast, flexible, and brutally unforgiving. When the market moves hard against a trader, a position can be liquidated in seconds. In plain English: the exchange closes the trade because the margin backing it is gone. Goodbye, account. Hello, learning experience.

Selig’s defense of approval reflects a bigger policy split in the US crypto debate. One camp argues that if perpetual futures are already a major part of the global market, the US should regulate them properly instead of pretending they do not exist. The other camp says this is exactly the kind of product that turns retail traders into cautionary tales and gives predatory platforms a fresh way to separate people from their money.

Supporters of onshore approval make a fairly straightforward case. If perps are going to trade anyway, it is better for that activity to happen under US rules than on offshore exchanges with loose oversight and questionable safeguards. A regulated venue could offer clearer disclosures, stricter surveillance, better market integrity, and more transparency around how positions are handled. That would not make the products safe — no serious adult is claiming that — but it could make them less of a regulatory circus.

There is also a competitiveness angle. Offshore exchanges have spent years building deep crypto derivatives markets, while the US has often responded with hesitation, enforcement, or bureaucratic foot-dragging. That has pushed a lot of activity abroad. In practice, that means American traders still get access to the same speculative products, just with fewer protections and more counterparty risk. A classic example of the state banning the front door while leaving the side window wide open.

On the other side, the criticism is not exactly coming out of thin air. Perps are highly leveraged instruments, and leverage is just a polite word for “more risk, faster.” A trader using 10x leverage does not need the market to move very far in the wrong direction to get wiped out. Even experienced traders can get chopped up. For newer users, especially the kind lured in by social media screenshots and fake hero trades, perps can be a financial meat grinder.

That is why opponents of US approval keep hammering the same point: consumer protection matters, and too many crypto venues have treated retail users like easy prey. Hidden liquidation rules, opaque funding mechanics, and aggressive promotional tactics are not bugs; they are often part of the business model. If regulators approve perps without serious guardrails, the result could be less “market modernization” and more legalized account vaporization.

For readers less familiar with the mechanics, perps usually stay close to the underlying spot price through something called a funding rate. This is a periodic payment between long and short traders that helps keep the contract anchored to the real market price. It is one of the reasons perps became so dominant in crypto: traders can hold positions indefinitely, the market stays active around the clock, and exchanges can keep fees flowing. The whole machine hums along nicely — right up until it blows up in somebody’s face.

That matters for Bitcoin too, even for spot holders who never touch a derivative. Perpetual futures influence liquidity, volatility, and price discovery across the crypto market. Price discovery is just a fancy way of saying “where the market actually thinks the price should be.” When derivatives markets are deep and active, they can help tighten spreads and make it easier for buyers and sellers to meet. When they are distorted or heavily leveraged, they can also exaggerate moves and trigger cascading liquidations.

Bitcoin has long been shaped by derivatives activity. A massive perp market can pull spot prices around, sharpen volatility, and create the kind of liquidations that make chart watchers either euphoric or seasick. That is not necessarily bad. Mature markets use derivatives all the time. The problem is when crypto pretends every new leveraged product is harmless innovation instead of a loaded weapon with a pretty interface.

The pro-approval argument is strongest when it focuses on reality instead of ideology. Perps already exist, traders already use them, and offshore platforms already dominate much of the volume. If the US wants to keep capital, talent, and trading activity onshore, then pretending these contracts can be wished away is a losing game. Regulation, surveillance, disclosures, margin rules, and position limits may not eliminate the danger, but they can at least make the danger more visible and less fraudulent.

The anti-approval argument is strongest when it refuses to get seduced by crypto’s favorite fairy tale: that more access automatically means more freedom. Sometimes it does. Sometimes it just means more ways for reckless people to torch their own money while an exchange collects fees and calls it financial progress. Freedom without education, transparency, and accountability is just a fast lane to regret.

That is the actual tension here. It is not simply innovation versus safety. It is whether the US wants to regulate a real market as it exists, or keep driving it underground and offshore while acting shocked that the activity never stops. Crypto has seen this movie before. Prohibition does not kill demand; it usually just exports the risk.

Key questions and takeaways

What are perpetual futures?

Perpetual futures, or perps, are crypto derivatives that let traders speculate on price without owning the underlying asset and without a contract expiry date.

Why are perps such a big deal in crypto?

They are one of the most widely used tools for leveraged trading, liquidity, and price discovery. They also drive a large chunk of market activity across Bitcoin and the broader crypto sector.

Why is Michael Selig defending approval in the US?

His argument is that bringing perps onshore can strengthen US market competitiveness, improve oversight, and reduce reliance on offshore exchanges with weaker protections.

What is the biggest risk for retail traders?

Leverage. It can magnify profits, but it can also wipe out positions quickly. In volatile crypto markets, that can happen in minutes.

Do perps help Bitcoin?

They can. A deep derivatives market can improve liquidity and price discovery. But they can also increase volatility and fuel liquidation cascades, so the benefits come with real trade-offs.

Should the US allow them?

If they are going to exist regardless, a regulated onshore market is likely better than pushing traders toward offshore venues. But approval without strong consumer protections would be a flimsy joke dressed up as progress.

Perps are not going away, and neither is the argument over who gets to trade them, where, and under what rules. For Bitcoin markets, the decision matters because derivatives are now part of the plumbing. The question is not whether risk exists. The question is whether the US wants to manage that risk like adults — or keep playing regulatory hide-and-seek while the rest of the world keeps trading.