DeFi Perps Deserve a Path Forward in the US: Paradigm Responds to the CFTC’s Perpetual Derivatives Request for Comment

It’s time to focus on the regulatory questions not just of today, but tomorrow. And that means truly tackling the challenge of perpetual contracts.

Last week, Paradigm submitted a comment letter to the CFTC proposing the agency craft a comprehensive regulatory framework for US-listed perpetual derivatives. While the Commission’s recent Request for Comment focuses narrowly on perps listed by centralized entities, it largely misses the more important and actually transformative opportunity: perpetuals traded via decentralized finance (DeFi) protocols.

Perpetuals are the dominant global crypto derivative and already power some of our most liquid and innovative markets. These non-expiring futures contracts closely track spot markets, offer significant capital efficiency, and enable 24/7 trading without the rollover headaches of traditional futures. In fact, by 2025, perps accounted for 93% of all crypto derivatives volume — a staggering number that underscores their centrality to the market. 1

But the CeFi perpetuals are merely the concept in miniature; it’s DeFi-based perpetuals that are their true expression. Unlike their centralized counterparts, DeFi perps are transparent and composable. Funding rates, open interest, and trade data are all onchain and auditable. DeFi perpetuals integrate seamlessly across DeFi primitives, whether lending protocols, liquidity pools, prediction markets, or options markets — unlocking powerful, permissionless financial tooling. And because users custody their own assets, counterparty risk is minimized by design. The system is visible, forever in motion, and elegant.

Yet despite these benefits, DeFi perps remain effectively off-limits in the U.S., trapped in regulatory gray zones and threatened (at least over the last few years) by enforcement-first policies. The Commission’s existing framework isn’t built for decentralized systems — and forcing perps into legacy boxes like SEFs or DCMs risks stifling an entire category of financial innovation.

We’re asking the CFTC to embrace its mandate to promote responsible innovation and fair competition — and to do so by convening a Perpetuals Special Advisory Committee (PSAC), composed of experts from academia, the regulatory world, and private industry. This new body should deliver clear recommendations within 90 days on how DeFi perpetuals can operate legally under a modernized, tech-neutral regulatory regime. This should be composed of experts in perpetuals, crypto industry participants, and also those with a gimlet eye toward these products. The goal of the PSAC must be, like the other CFTC advisory committees, to be truth-seeking, not merely a group established to reach a pre-determined outcome.

Specifically, the PSAC should explore:

• Public interest exemptions for DeFi protocols from traditional SEF/DCM registration requirements;
• A fit-for-purpose compliance framework that accounts for the decentralized nature of the crypto tech stack — with different rules for dev teams, front-ends, and protocol users;
• A clear path to retail participation that empowers users with meaningful disclosures and appropriate safeguards, not gatekeeping or paternalism.

The CFTC has already signaled a move away from regulation by enforcement — but more is needed. DeFi protocols aren’t a fad; they’re consequential, durable financial infrastructure. The Commission has a unique opportunity to help America lead the next chapter of global derivatives markets development.

It’s time to recognize that DeFi perps aren’t just part of the market — they’re its future. Let’s give them the regulatory clarity they deserve, and bring this activity onshore.

Read the full comment letter here.