Wall Street veteran Don Wilson says regulators are getting perps all wrong

Perpetual futures have become one of crypto’s defining financial products, but DRW CEO Don Wilson says much of what people think they know about them is wrong.

In a series of posts on X, Wilson argued that perpetual futures — or “perps” — are simply futures contracts without an expiration date. The features often associated with crypto perpetuals, such as high leverage, auto-deleveraging (ADL) and around-the-clock trading, are characteristics of how some crypto exchanges chose to implement the products, not the contracts themselves.

“Most of what people think they know about ‘perps’ … has nothing to do with the contract itself,” Wilson wrote.

His comments come as interest in bringing perpetual futures into regulated U.S. markets continues to grow. Several exchanges and market participants have explored launching perpetual futures beyond crypto, though questions remain over how the products should be regulated and whether they fit within existing futures or swaps frameworks. Kalshi, which saw perps trading explode shortly after launching, recently submitted a proposal with regulators to expand its offerings to precious metals.

Unlike traditional futures markets, crypto exchanges like Hyperliquid operate continuously, use digital collateral and can calculate margin requirements in real time. Those technological differences allowed exchanges to offer products with higher leverage and alternative liquidation mechanisms, including ADL, which automatically reduces winning positions when losing traders cannot cover their losses.

Wilson said those design choices should not be confused with perpetual futures themselves.

“I’m not a fan of ADL,” he wrote, adding that there is “no reason it needs to be used for perps.”

Instead, Wilson argued that digital payment rails create opportunities to improve risk management. Traditional clearinghouses generally calculate margin once a day, with market participants often having until the following business day to post additional collateral. Because markets can move significantly during that window, clearinghouses require relatively large initial margin buffers.

With real-time settlement, however, exchanges can recalculate margin continuously and require traders to post collateral immediately, reducing the need for large upfront margin requirements while maintaining the same level of protection, Wilson said. Whether exchanges choose to translate those efficiencies into higher leverage is a business decision, not a defining feature of perpetual futures.

Wilson said the real innovation of perpetual futures is that they eliminate the need for investors to repeatedly roll expiring contracts, reducing transaction costs, market impact and roll slippage while allowing positions to more closely track the front of the futures curve.

He also urged regulators to focus on economic substance rather than legal labels.

“There’s no reason to treat perpetuals as swaps simply because they don’t expire,” Wilson wrote. “Economically, they’re futures.”

Wilson concluded by calling for perpetual futures to be available across a broader range of markets, including commodities, securities and crypto, arguing that they should be viewed as another tool for price discovery and risk management rather than as a crypto-specific innovation.