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

Last week, Paradigm filed a comment letter with the Commodity Futures Trading Commission regarding the trading and clearing of perpetual derivatives. The request’s focus on perpetuals certified by registered entities is a reasonable place to start, but it is just that: a start. Perpetuals are the dominant crypto derivative, accounting for 93 percent of all crypto derivatives volume in 2025. And most of that trading happens on DeFi protocols, on which the request is conspicuously silent.

In our view, any durable framework for perpetuals must include DeFi. Onchain perpetuals are a superior product on every axis, providing unparalleled transparency, composability, and counterparty risk management. That said, we understand this is a big lift, so our letter asks the CFTC to create a Perpetuals Special Advisory Committee, composed of those with both rose-colored glasses and gimlet eyes for perpetuals, and to give it 90 days to report on how DeFi perpetuals can operate in tech-neutral U.S. regime. 

Three areas deserve particular attention from this new committee:

  • A public interest exemption: Forcing DeFi protocols into the SEF or DCM core principles is an impractical solution to a problem that could be solved in ways that also increase the Commission’s control over this emerging market. The CEA allows the CFTC to exempt transactions and persons on stated terms and for stated periods, and the Commission should use this authority to adopt a time-limited, conditional exemption that imposes real guardrails.

  • A fit-for-purpose compliance framework: Existing CFTC obligations should be evaluated and allocated to operators in a way that accounts for the decentralized nature of crypto. Different levels of the crypto stack—from front ends to development teams to end users—need different rules, but they all need a regulator who understands what they can (and cannot) do.

  • A path for retail: Retail participation in these markets is a clock that cannot be unwound. Users know the value that these markets provide, and shutting off a U.S. pathway will not stop retail from participating; it will just force them off U.S. exchanges. The Commission should avoid an impulse towards paternalism that would do nothing but protect potential beneficiaries out of the market.

The Commission should be commended for ending the regulation by enforcement that characterized its posture for too long, but building something durable is a different task. The CFTC has repeatedly shown that it is up to the challenge—it did, after all, set standards for Bitcoin futures that built the deepest, most liquid, and best regulated markets in the world—and we are confident that it will meet the moment here as well. We appreciate the Commission taking these questions up, and you can read our full comment here.

Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. This post reflects the current opinions of the authors and is not made on behalf of Paradigm or its affiliates and does not necessarily reflect the opinions of Paradigm, its affiliates or individuals associated with Paradigm. The opinions reflected herein are subject to change without being updated.

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