Regulated Perps Could Follow Bitcoin ETF Adoption Path, Kraken Says

The rollout of regulated perpetual futures in the U.S. could mirror the adoption curve of spot bitcoin ETFs, with sophisticated traders entering first and larger asset managers following later, according to a Kraken executive overseeing the exchange's global derivatives business.

"When I think about those participants in trading, typically the first movers are going to be the ones that are more sophisticated in nature," John Palmer, head of derivatives at Kraken, said in an interview. "So they're either already connected to exchanges and trading themselves in a proprietary manner."

Palmer drew a direct comparison to the launch of spot bitcoin ETFs in January 2024. "We saw retail, we saw sophisticated customers really enter that market very quickly, and then we slowly started to see investment advisors, asset managers enter the space in a trailing fashion because they had to go through their own due diligence and their own corporate governance structures," he said. "I think we will see the same thing for perps."

The U.S. derivatives market is preparing for the arrival of regulated "true" perpetual futures, a product that has long dominated offshore crypto trading venues such as Hyperliquid (HYPE). Perpetual futures, or perps, allow traders to maintain leveraged positions without an expiration date, unlike traditional futures contracts that must eventually be rolled into a new contract.

Globally, perpetual futures account for the vast majority of crypto derivatives volume, yet U.S. traders have historically had limited access due to regulatory restrictions.

Kraken recently entered the U.S. regulated derivatives market through its acquisitions of NinjaTrader and Bitnomial, giving it access to futures commission merchant, exchange and clearing licenses regulated by the Commodity Futures Trading Commission (CFTC). The company expects to launch perpetual futures on Kraken Pro in the coming weeks.

Palmer argued that one reason perpetual futures became so successful outside the U.S. is their simplicity. Unlike dated futures, which require traders to manage expirations and contract rolls, perps allow positions to remain open indefinitely.

"I think it's a simple derivative structure compared to some of the nuances of dealing with dated futures," he said. "If I buy a June [future], then it expires, and if I want to keep my position on, I have to roll it."

Kraken believes removing those complexities, and eventually allowing crypto assets to be used as collateral, could help bring U.S. traders closer to the experience available in international markets, Palmer said.

Prediction market platform Kalshi, which launched U.S. perpetual futures last week, said on Wednesday that it already crossed $1 billion in trading volume.

Palmer said broader institutional adoption will likely take time. "When you take further steps back in the asset management chain, then you have investment committees. There could be more additional governance, depending on the entity type," he said. "Those will typically require them to move a little bit slower."

The comparison may indicate how much the U.S. crypto derivatives market could change over the next several years. While spot bitcoin ETFs opened the door for traditional investors to gain exposure to bitcoin through brokerage accounts, regulated perpetual futures could give both retail and institutional traders access to one of crypto's most popular trading instruments without needing to use offshore venues.

For now, the company sees the launch of regulated perps as just the beginning. Despite crypto derivatives generating trillions of dollars in annual volume globally, Palmer said the U.S. market remains in its early stages.

"We're at the beginning of the game," he said. "We're at the national anthem still."