Latest developments: Kalshi’s launch of CFTC-regulated crypto-perpetuals has revived a long-running debate about definitions of financial markets.
- John Lothian and Kalshis Udesh Jha joined The Policy Protocol to debate this topic.
- John Lothian, publisher of John Lothian News, argued that perpetual contracts are similar to swaps because they involve recurring bilateral cash flow payments through funding-rate mechanisms.
- Udesh Jha, Kalshi’s head of stock market analysis, countered that perpetuals work 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 supervision.
The disagreement: Both sides view the same product through different regulatory lenses.
- Lothian said perpetuals differ from traditional futures because financing interest payments create ongoing cash flows between market participants, a feature he associates with swaps.
- Jha argued that funding rates simply make funding costs explicit rather than embedding them in futures prices, making perpetuals a more efficient version of existing futures markets.
- According to Jha, perpetuities also eliminate the need for traders to roll positions into new contract months, reducing friction and costs.
Why it’s important: The classification could determine who can access the products and under which rules.
