Kalshi’s crypto perpetuals spark debate over whether they’re futures or swaps

Policy Kalshi’s crypto perpetuals spark debate over whether they’re futures or swaps A clash between derivatives veterans is exposing a deeper discussion over how U.S. regulators should classify crypto perpetual contracts. By AI Boost | Edited by Jennifer Sanasie Jun 12, 2026, 3:37 p.m. 2 min read Make preferred on Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Make preferred on Latest developments: Kalshi’s launch of CFTC-regulated crypto perpetuals has reignited a long-running debate over financial market definitions. John Lothian and Kalshi's Udesh Jha joined The Policy Protocol to debate this topic. John Lothian, publisher of John Lothian News, argued that perpetual contracts resemble swaps because they involve recurring bilateral cash-flow payments through funding-rate mechanisms. Udesh Jha, Kalshi’s head of exchange analytics, countered that perpetuals function like futures because they are exchange-traded, centrally cleared and designed to track underlying spot markets. The debate follows the recent approval and launch of crypto perpetuals on Kalshi under CFTC oversight. The disagreement: Both sides view the same product through different regulatory lenses. Lothian said perpetuals differ from traditional futures because funding-rate payments create ongoing cash flows between market participants, a feature he associates with swaps. Jha argued that funding rates merely make financing costs explicit rather than embedding them in futures prices, making perpetuals a more efficient version of existing futures markets. According to Jha, perpetuals also eliminate the need for traders to roll positions into new contract months, reducing friction and costs. Why it matters: The classification could determine who can access the products and under what rules. Lothian noted that labeling perpetuals as swaps could require different regulatory treatment and potentially limit retail participation unless Congress or regulators create new frameworks. Jha said bringing perpetual trading onshore gives U.S. customers access to a product that already generates trillions of dollars in offshore volume while providing stronger protections and oversight. The outcome could influence customer protections, market structure, tax treatment and competitive dynamics between U.S. and offshore crypto venues. The complication: Concerns about market manipulation remain unresolved. Lothian warned that funding-rate calculation windows could create incentives for traders to influence prices around settlement periods, potentially affecting large positions. He cited concerns raised by market participants about the susceptibility of perpetual-style contracts to manipulation. Jha responded that Kalshi calculates funding rates continuously throughout funding cycles rather than relying on a single closing period, which he said reduces manipulation risks. What comes next: The debate is unlikely to end with Kalshi’s launch. Lothian argued regulators should carefully preserve longstanding distinctions between futures and swaps. Jha maintained that existing regulatory principles already support treating perpetuals as futures and that additional market education is needed. As U.S. crypto derivatives markets expand, regulators and industry participants will continue testing whether traditional legal definitions fit new products. AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards . For more information, see CoinDesk's full AI Policy . 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