No Expiry, No Precedent: Kalshi and Coinbase Are Racing to Sell America a Contract It Has Never Legally Owned

Every futures contract in America dies on a calendar. Corn, crude, the S&P 500, even the odd weather derivative — each one carries an expiry date, a moment when the position settles and the trader rolls forward or walks away. The most heavily traded product in crypto does not work that way. It has no expiry date at all. It floats indefinitely, held in place by a small fee that changes hands every few hours between longs and shorts. For nearly a decade, that product — the perpetual future — has had no legal home in the United States. Not because the mechanism fails. It works, violently well, on offshore venues that clear more volume in a day than most American exchanges see in a month. It has no home because nobody has convinced a US regulator that it can be trusted here. Two filings suggest someone is trying. Kalshi has submitted paperwork to list perpetual futures tied to US equities. Coinbase is moving on the same target. Both hold federal derivatives licenses. Both are, in their own ways, racing to become the first regulated American venue where a trader can hold an equity position at three in the morning, on a Saturday, with leverage. Let me be precise about what that sentence contains, and what it does not. The public record here is thin — a filing, a reported race, a narrative about continuous market access. No published contract specifications. No funding intervals. No margin schedules. So I will separate the two things I can discuss honestly: the mechanism as it already exists, and what transplanting it would actually demand. I have been reading perpetual contract documentation since I was nineteen, when I ran Blockchain Literacy Circles out of a university library in Hangzhou and found myself explaining funding rates to art students. Fifteen whitepaper breakdowns later, I learned that the hardest part of teaching this material is not the math. It is the part where you admit how much of the mechanism rests on assumptions nobody has tested. Start with the mechanism, because the mechanism is where the real difficulty lives. A perpetual future has no settlement date, so nothing mechanically forces its price to converge on the spot price of whatever it tracks. The convergence is manufactured. Every venue defines a reference index — usually a weighted composite of spot prices across several exchanges — and compares it to the price of the perpetual itself. When the perpetual trades above the index, longs pay shorts. When it trades below, shorts pay longs. That payment, the funding rate, is the entire anchor. Remove it and the contract drifts toward whatever the crowd believes, which is exactly what it was invented to prevent. That design has held up because in crypto the reference price never sleeps. Bitcoin trades on dozens of venues at once, all live, all quoting. The index can be recomputed every second, the mark price follows, liquidations fire, the insurance fund absorbs the residue, and the auto-deleveraging engine closes the gap. The system is closed and continuous. It is also almost entirely centralized — a matching engine operated by one company that is simultaneously the counterparty to every trade. Nobody in this debate should pretend otherwise. An equity perpetual inherits that architecture but not the assumption underneath it. Stocks sleep. They close at 4 p.m. in New York and reopen the next morning, and on weekends they do not trade at all. So answer this: what is the index price of a single large-cap stock at 3:07 a.m. on a Sunday? The honest answers are all uncomfortable. You can freeze the index at Friday's close, which means the perpetual anchors to a stale number while absorbing every piece of weekend news. You can splice in index futures, which track a basket and not the single name. You can lean on extended-hours prints, which exist but are thin enough that a modest order moves the tape. Or you can source from an oracle feed, which introduces a new counterparty into the settlement path. Every one of those choices creates a place where the reference price can be pushed. In crypto, manipulating an index means moving multiple spot markets simultaneously across several exchanges — expensive, visible, and quickly arbitraged away. In an overnight equity tape, moving the reference can mean moving one thin order book. Trust is not compiled. It is verified, and then shared, and here the verification depends on data that may not exist between Friday evening and Monday morning. Then there is the funding problem. Equity prices gap. An earnings release, a central bank surprise, a geopolitical headline — the underlying jumps overnight while the derivative sits there, open and margined. If the index is frozen, the premium on the perpetual balloons, and funding becomes either punitive or suspended. Cap the funding rate and the anchor weakens. Suspend it and you have admitted the contract cannot do the one thing it was designed to do. Either way, some longs get liquidated not because they were wrong about the company, but because the plumbing could not express what the market already knew. Clearing is the next layer, and it is the layer most retail traders never see. A perpetual venue needs a liquidation engine, an insurance fund, and a mechanism for closing positions when that fund runs dry. In crypto, that machinery has been stress-tested by some genuinely brutal days — cascading liquidations, negative insurance funds, exchange-level interventions that appeared in no marketing deck. Code is only as strong as the trust it protects. And when the code is a matching engine owned and operated by a single regulated entity, the trust in question is not cryptographic. It is institutional. That entity can pause trading, re-index, adjust margin requirements, or settle positions in an orderly wind-down, and under a US regulatory framework it will be expected to have those powers in writing. Which raises a question I keep returning to: a perpetual that can be suspended or re-indexed by its operator on a Sunday afternoon is not quite the instrument crypto traders fell in love with. It is something adjacent, wearing the same name. There is a quieter question buried in the collateral layer. A leveraged contract that never closes has to be margined in something, and that something has to be held somewhere, earning something. In crypto the answer has usually been stablecoins, which is its own conversation — a compliance-first stablecoin can freeze an address within a day, so margin that looks like cash can stop behaving like cash at the worst possible moment. In a regulated equity perpetual, the answer will be Treasury bills, a custodian bank, and a collateral schedule that will tell you more about the product's real risk than any funding formula ever will. None of this is an argument against the product. It is an argument for reading the contract specifications the day they are published, instead of the press release the day it is filed. The regulatory question is where the race will actually be decided, and it is messier than the technology. Derivatives on single stocks and narrow-based indexes fall under a joint jurisdiction arrangement between the SEC and the CFTC that dates back to 1982. Broad-based index futures belong to the CFTC alone. A perpetual contract has no expiry, which means it fits neither category cleanly, because American derivatives law was largely written on the assumption that contracts expire. That ambiguity is the whole game. A venue that secures the classification it wants gets to launch. A venue that gets the other one gets a year of jurisdictional ping-pong. This is where Kalshi's recent history matters more than its balance sheet. It has already litigated against its own regulator and won, which tells you something about institutional appetite for a product with no precedent. It also tells you why Coinbase's distribution advantage may not be decisive here. Coinbase can push a product to millions of accounts on day one. Kalshi can push a product past a regulator that has not yet decided how to feel about it. Those are different muscles, and in this specific fight the second one is worth more — at least until approval, at which point the first one tends to matter a great deal. Here is where I get contrarian about the framing. The obvious reading of this race is that two exchanges want to sell leveraged stocks to crypto natives. I think that is the least interesting part of it. If a perpetual structure ever clears US regulation on equities, the precedent travels. It becomes much harder to argue that a contract with no expiry is inherently incompatible with American market structure, and that argument is the load-bearing wall holding perpetuals out of the US retail market today. The offshore perpetual market is one of the largest pools of trading volume on earth. A compliant American venue would not capture all of it. It would capture a slice — and that slice is larger than the entire equity perpetual opportunity that started this conversation. The second thing the race obscures is who actually wins. Not the venue. The middle of the stack. Market makers who can quote an overnight equity book. Clearing houses that price the risk of a market that never closes. Index providers who construct the 3 a.m. reference price. Whoever owns that reference price owns the product, because in a perpetual the index is not a data point — it is the thing the contract is anchored to. Listing is the easy part. And the third thing, which nobody filing paperwork wants to say out loud: the approved product probably will not be a perpetual in any recognizable sense. It will carry funding caps, position limits, higher margin, and possibly a periodic reset that quietly reintroduces the expiry date the design was built to escape. That is not regulatory failure. That is what a bridge between two market structures looks like when it is built by people who have to defend it in front of a committee. Bridges are not load-bearing because of their code; they hold because of who agrees to cross them. The race itself will be decided slowly, over quarters, in comment letters and staff memos that almost nobody outside a few dozen people will ever read. That is normal. The part that deserves attention is the asymmetry. If the filings fail, nothing changes — the offshore perpetual keeps trading, and American retail keeps watching it through a window, leveraged at levels no domestic venue would ever be permitted to offer, in a market with no investor protection at all. If they succeed, an entire generation of traders learns to take round-the-clock markets for granted and never learns why the structure was risky in the first place. I spent the 2022 crash running a weekly webinar series for people who had just discovered that a smart contract could liquidate them faster than they could read the documentation. Two hundred students, most of them non-technical, most of them frightened. Fifty of them walked back through their transaction logs with me, one at a time, and recovered funds. What that year taught me is that liquidation risk is not an abstraction. It is a person at a laptop at 2 a.m. deciding between adding margin and losing everything. Any venue proposing to bring that experience into the stock market should be asked, directly and on the record, what it plans to do for the person at the laptop. We do not need another venue. We need to know who is holding the plug, and what happens when they pull it. That question is the actual subject of both filings, whether or not it appears in either document. Kalshi and Coinbase are not really racing each other. They are racing a definition — of what a contract is, of who is allowed to own one, and of whether the market that never closes can survive being told it has to answer to someone at nine in the morning.