Crypto Perpetual Futures: What They Are
A crypto perpetual future tracks a coin's price with no expiry date. Funding payments and leverage shape the risks that traders take on these contracts.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- Funding payments flow between longs and shorts and repeat while a position is open.
- Leverage lets a trader control a larger position than the margin posted.
- US retail traders generally cannot use perpetuals on CFTC-regulated exchanges.
- A perpetual tracks the coin price and gives no ownership of the coin.
Perpetual futures are cash-settled, so the parties settle in money rather than by delivering the coin.
How Does Funding Keep Perpetuals Near Spot?
A perpetual has no expiry, so nothing forces its price to match the coin. Funding closes that gap: one side pays the other on a schedule, and the payment repeats while the position stays open. A long bets on a rise, and a short bets on a fall. If the contract trades above spot, longs usually pay shorts, and if it trades below, shorts usually pay longs.
What Triggers Liquidation on Perpetual Futures?
Leverage lets a trader control a position larger than the margin posted. If the price moves against it, the exchange can close the position, and the margin is usually lost.
Can US Traders Use Crypto Perpetual Futures?
US retail traders generally cannot access crypto perpetual futures on CFTC-regulated exchanges. Those venues list futures that expire on a set date instead.
How Are They Different From Regular Futures?
A regular futures contract expires on a set date, so a trader must roll it into a new contract to stay in. A perpetual has no expiry settlement, and funding payments take its place.
Where Are Crypto Perpetual Futures Traded?
Crypto perpetual futures trade on crypto derivative exchanges, and many sit outside the United States. Each exchange sets its own rules for leverage, liquidation, and who may open an account.
- Many offshore venues block US residents.
- Account terms and protections differ from US futures markets.
- Customer funds often sit with the exchange rather than a broker.
Frequently asked questions
US tax treatment of perpetual futures is unsettled, and general derivative rules may apply. A tax advisor can explain your reporting.
Liquidation usually closes the position, and the loss can stop at the margin posted. Some exchange terms say a trader owes any shortfall.
No. You hold a contract tied to the coin's price, not the coin itself.
