Written by: Xiaobing, Deep Tide TechFlow

On May 29, the CFTC approved Kalshi to list a perpetual contract linked to the price of Bitcoin spot, coded BTCPERP. This is the first time the U.S. regulatory framework has formally accepted the largest derivative in the cryptocurrency trading volume. Chairman Mike Selig called it a "major step" and noted it in Trump's political ledger of "making America the world's crypto capital."

The news is significant, but what truly determines the success or failure of this matter is the leverage limit.

In the offshore market, the attractiveness of perpetual contracts is built on 40x leverage, no licensing required, and instant trading. The starting leverage for Kalshi’s BTCPERP is set at 10x, and Selig has made it very clear in the tone of the whole framework: to "limit excessive leverage, volatility, and systemic risk." So, what was done in Washington that day had two aspects. One aspect is to welcome perpetual contracts, the other is to remove the most addictive part at the door. Legalization and detoxification happened on the same day.

Let’s first see clearly the quality of this card. Kalshi obtained a formal listing approval from the CFTC, targeting the Bitcoin spot price, treated as a futures contract, entering through the front door. On the same day, Coinbase received something else, a no-action letter allowing it to provide "covered" crypto perpetual contracts to U.S. customers through the associated offshore exchange Deribit, treated as offshore futures. One is listed in the U.S., the other opens a green light for a detour offshore. Putting the two side by side as "both approved" blurs the true boundaries that regulators are willing to bear.

The phrase "the first in U.S. history" should also be taken with a grain of salt. Last December, under former Chair Caroline Pham, the CFTC granted a similar license to Bitnomial. The phrase "first perpetual" on Kalshi’s blog is closer to marketing language.

Why is regulation easing at this point? The answer may lie in the wildfire offshore.

In the past two years, the growth of perpetual contracts has almost entirely occurred in places the U.S. cannot reach. According to CoinGecko, the top ten global perpetual exchanges processed about $92.9 trillion in trading volume in 2025, a year-on-year increase of 64.6%. More glaring is the context of this growth: In the fourth quarter of last year, Bitcoin and mainstream coins plummeted, the spot side was bleeding, yet the demand for leverage gambling was expanding. When the spot doesn't make money, perpetual contracts become the only reason for gamblers to stay at the table.

This force is called Hyperliquid. This decentralized exchange, without VC backing, without token pre-sales, and directly airdropping 30% of tokens to users, has reportedly captured about 70-80% of the on-chain perpetual market according to several data platforms. Its 30-day trading volume in April exceeded $180 billion, distancing itself from all decentralized competitors by more than one position. It does all this without holding a penny of users' money; the order book, matching, and clearing all run on-chain. A system without a headquarters, shareholders, or accepting traditional regulation has grown to a size that Washington can no longer pretend to ignore, which is the real pressure that the CFTC must address.

Thus, all questions hinge on that leverage limit.

Selig is betting on the compliance premium. Bringing trading back onshore, using transparent benchmark prices, monitorable positions, and constrained leverage, to earn the trust of institutions and professional funds, allowing the U.S. to regain pricing power in this market. Offshore players are betting on the other side. The compliance version, slashed to a quarter of the leverage, coupled with KYC and full monitoring, holds no appeal for real high-frequency gamblers; they will continue to stay in the worlds of Hyperliquid and Binance.

In the days since the news, Bitcoin has remained around $73,000, showing almost no reaction to the approval. The market is clearer than anyone: this is a structural matter, with no immediate effect on prices.

Another detail worth highlighting: this framework was pushed by one person. The CFTC's five-member commission currently has only Selig remaining as an active commissioner, and he can make decisions on his own. A temporary arrangement that could be overturned at any moment by the next regulator is riding on a political banner. Its strength comes from this, and its fragility also stems from this. A door that can be opened with one command today can also be closed with one command tomorrow. So don’t rush to declare victory for either side.

Washington has drawn a line that it is willing to recognize: you can come in, but you must follow my rules, and leverage is capped here. The onshore market will use the positioning data in the coming months to answer whether it is willing to enter.

What needs to be watched next is only one set of numbers, the CFTC-regulated position volume of perpetual contracts. If onshore positions continue to rise in the coming months, it indicates that the compliance premium can indeed pull liquidity. If it stops at a level that is neither painful nor itchy, it shows that the market is voting with its feet, the rules can regulate exchanges but cannot control where leverage goes.

Before that curve provides an answer, the approval on May 29 feels more like a trial, not a victory.