A perpetual future is a leveraged derivative contract that tracks the price of an underlying asset, such as bitcoin, without ever expiring. What keeps its price from drifting away from the spot market is a recurring transfer of money between the traders holding long positions and those holding short positions, called a funding payment: when the contract trades above spot, longs pay shorts, and when it trades below spot, shorts pay longs, according to explainers published by Coinbase, Kraken and the Futures Industry Association (FIA).
Why a contract with no expiry needs a separate anchor to spot
An ordinary futures contract eventually settles on a fixed date, and that settlement forces its price back in line with the underlying market. A perpetual has no such date, so nothing forces convergence on its own. Cube Exchange’s trading-education page, published 21 March 2026, describes this as the central design problem perpetuals had to solve: replace the one-time pull of expiry with an ongoing economic incentive that pushes the contract back toward spot continuously rather than terminally.
The funding rate is that incentive. FIA’s explainer, published 24 September 2025, states that perpetuals stay close to spot through a funding rate calculated from the gap between the contract price and the spot price, with payment flowing from whichever side is trading at a premium to whichever side is trading at a discount. When the perp price runs above spot, the long side pays; when it runs below, the short side pays. The payment does not go to the exchange – it passes directly between traders.
A worked example of the arbitrage
Cube Exchange’s explainer, dated 21 March 2026, works through a hypothetical it introduces with the word “imagine”: the bitcoin perpetual trading slightly above bitcoin spot. The perp is running rich relative to spot, which the exchange reflects as a positive funding rate – longs owe a payment to shorts. A trader who spots this gap can buy spot bitcoin and simultaneously short the perpetual. If the funding payment collected covers the cost of financing the spot purchase, the trade is profitable, and by doing it the trader adds buying pressure to spot and selling pressure to the perp, narrowing the gap. Cube frames the scenario as a hypothetical rather than a live market reading, and this page treats it the same way.
Coinbase’s own explainer runs a separate hypothetical to show what leverage does to that exposure. A trader named Alice opens a long perpetual position with $1,000 in margin and 10x leverage, giving her $10,000 of exposure. If the price moves 5% in her favour, Coinbase’s example has her earning $500, a 50% return on her margin; the same 5% move against her costs her $500 – half her capital. Coinbase’s risk section separately notes that a 5% adverse move against a position carrying 20x leverage can be enough to trigger liquidation. Neither figure is a market data point; both are Coinbase’s teaching examples and carry no date in the source material, which is one reason this page treats them as illustration rather than current pricing.
The mechanics vary by venue
The economic idea – a recurring payment that punishes the overpriced side – is common across venues. The details of how it is calculated are not. Cube Exchange’s comparison table, published 21 March 2026, shows dYdX sampling an impact bid/ask price against an index and settling funding hourly through a block-proposer voting process with governance-set caps; Deribit calculating funding from the gap between mark price and index price, applying a neutral band of ±0.025% and displaying an eight-hour rate that accrues continuously; and BitMEX using a daily funding timestamp built from the contract-to-index spread plus an interest component.
Kraken’s own guide, dated 18 June 2026, states that on Kraken Pro the funding interval is eight hours for US customers and one hour for customers in the European Economic Area and other regions. FIA’s 24 September 2025 explainer generalises the same pattern: funding payments typically occur roughly every eight hours on offshore exchanges and daily on US exchanges. The upshot for a trader is that “the funding rate” is not one uniform number; the frequency, the reference price and the caps that bound it are set by each venue.
Perpetual futures were launched by the crypto derivatives exchange BitMEX in 2016, according to both Kraken and FIA, and Kraken’s guide additionally attributes the underlying theoretical groundwork to economist Robert Shiller’s work from the early 1990s – a claim that appears in Kraken’s account only among the sources gathered here. FIA’s explainer, citing Bloomberg reporting sourced to CoinDesk Data, put monthly perpetual futures volume at $35 billion in January 2018, rising to $6.4 trillion in May 2025.
Why the legal label is suddenly a live dispute
Everything above assumes a perpetual future is, legally, a future. In the United States that assumption is now in active litigation. According to crypto.news, the CFTC approved a Bitcoin perpetual contract for the prediction-market exchange Kalshi in late May 2026, classifying it as a futures contract listed on a designated contract market – the same regulatory category CME itself operates under. Kalshi expanded into perpetuals on other tokens within weeks and reported more than $5 billion in trading volume, a figure crypto.news attributes to Kalshi itself and which is not independently verified in the reporting gathered for this page. Coinbase secured its own regulated route around the same period, per crypto.news.
The Defiant reports that on 13 June 2026, days after the Kalshi approval, the CFTC issued a no-action letter that let designated contract markets convert products already built like perpetuals into full perpetual contracts. CME Group’s chief executive, Terrence Duffy, disclosed on CNBC on 17 June 2026 that the exchange planned to sue, according to The Defiant.
Bloomberg reports that CME filed suit against the CFTC and its chair, Michael Selig, alleging Selig “circumvented the regulatory regime” required for approving derivatives as futures rather than as swaps. Bloomberg’s own account notes a difference in tax treatment between the two categories, but its wording does not make clear which of the two, in Bloomberg’s telling, gets the more favourable treatment, so this page does not resolve that ambiguity.
The distinction matters because futures and swaps sit under different parts of the US regulatory framework built after the 2008 financial crisis, with different clearing, venue and tax rules attached to each, according to crypto.news’s account of the dispute. If courts side with CME’s reading of the Dodd-Frank Act, perpetual contracts would face a different, and by CME’s own argument more demanding, regulatory path than the one that let Kalshi list its contract quickly. The CFTC’s position, as described by crypto.news, is that nothing in the Commodity Exchange Act or the agency’s own rules requires a futures contract to have a fixed expiration date, so the absence of an expiry does not disqualify a perpetual from being a future.
crypto.news’s reporting also notes that CME has separately pointed to its exclusive licenses over price benchmarks used by many crypto products, arguing related contracts should route through CME regardless of structure – a second front to the dispute, distinct from the futures-versus-swap claim. Separately, crypto.news reports that the CFTC has called CME’s planned lawsuit itself frivolous; its reporting does not say whether that characterization was meant to apply specifically to the benchmark-licensing argument or to the suit as a whole.
What this page does not tell you
This page does not tell you how the CME v CFTC case will be decided, or when. As of the reporting gathered here, the suit had just been filed and no court ruling had been reported by any of the three outlets covering it.
The worked examples used to explain funding and leverage – the bitcoin scenario from Cube Exchange and Alice’s $1,000-margin trade from Coinbase – are hypothetical teaching illustrations from vendor documentation, not live market prices, and neither source dates them to a specific market moment.
Trading-volume figures cited here are single-sourced: Kalshi’s reported $5 billion in volume comes from crypto.news’s account and is not independently verified against exchange-published data in this evidence set; the $35 billion-to-$6.4 trillion growth figure comes from Bloomberg reporting as cited secondhand in FIA’s newsletter, sourced to CoinDesk Data, and this page has not seen the primary Bloomberg or CoinDesk Data reporting directly.
The venue comparison here is drawn mainly from centralized and hybrid exchanges – dYdX, Deribit, BitMEX and Kraken. It does not cover how other on-chain perpetual protocols calculate or cap funding, and readers comparing a specific platform’s funding rate should check that platform’s own published methodology rather than assume it matches any of the mechanics described above.
Sources
Every fact above is attributed to one of these reports. Where they disagree, the article says so.
