Crypto Perpetuals Win First US Clearance via Kalshi, Coinbase

Breakout from predictions

Since April, Kalshi has been teasing its expansion into the financial product, which allows traders to buy or sell an asset at a lock-in price with no expiration date.

The Commodity Futures Trading Commission (CFTC) cleared the way on 29 May for the BTCPERP contract, the first non-event product for Kalshi, which, along with Polymarket, controls roughly 80% of the prediction market sector. The companies offer contracts based on the outcome of future events.

Coinbase as a bridge

"This marks Kalshi's evolution from prediction market leader to next-gen derivatives exchange," Tarek Mansour, CEO of CFTC-regulated Kalshi, said in a 29 May statement. "Onshore, safe, and regulated perps will improve capital allocation and risk management for countless American businesses."

Crypto exchange operator Coinbase took a different path into making perps available to US investors. Following a "no-action" letter from the CFTC, Coinbase Financial Markets can route US investors into global crypto perpetual futures and options products via its offshore Deribit crypto derivatives exchange. 

"US clients will at long last have a fully regulated, compliant solution to access all of crypto's largest markets," Coinbase said in a 29 May statement. Deribit holds over $31bn in Bitcoin options open interest alone, which Coinbase said represents the majority of the global options market.

Shares in Coinbase climbed 3.7% on the day of the statement, having advanced 4.9% the day before. Charles Schwab increased 2.3% amid a broader boost for retail brokerage platforms. Meanwhile, the token of Hyperliquid (HYPE), the offshore platform that lets crypto wallet holders trade perps, rose 12% from its 29 May close of $64.34 to $71.99 on 31 May, according to CoinGecko, even though the new rules would seem to create fresh competitors. Hyperliquid has also become increasingly popular among ETF issuers, potentially contributing to the renewed interest in holding its token.

Uncorking US demand

The decisions for Kalshi and Coinbase mean that US investors will no longer have to rely on offshore, decentralized platforms for these derivative products. Institutions that were banned from tapping the offshore markets for compliance reasons will be able to deploy capital under a regulated US system.

Coinbase noted that some US institutional customers have been forced to establish offshore entities just to access the crypto derivatives markets, "adding counterparty exposure and duplicative infrastructure costs."

Prediction markets' strengths

Kalshi's rival, Polymarket, is also in the perps race, having announced its product on 21 Apr. The platform allows users to trade leveraged long and short positions on Bitcoin, major stocks including Nvidia, Apple and Coinbase, as well as gold, with leverage options up to 10x and 24/7 trading.

Prediction market operators have typically sought to make money from people betting against each other on future events, attracting both retail consumers and institutional traders.

Because perpetuals enable continuous exposure to leverage without expiry, they offer the potential for 'cross-margining' – a mechanism that allows traders to share collateral across prediction market positions and perpetual futures trades on the same platform. Profits in one market can help satisfy margin requirements in the other, improving capital efficiency and reducing the chance of forced liquidations.