The Commodity Futures Trading Commission has cleared perpetual futures tied to individual stocks to begin trading on registered U.S. exchanges, bringing an instrument long associated with crypto markets into traditional equities for the first time.

The CFTC said Tuesday that “equity perpetual futures” can now trade on CFTC-registered exchanges. Perpetual futures are derivatives that track an asset’s price without an expiration date — unlike conventional futures, which expire on fixed dates and must be rolled into new contracts to keep a position open — allowing traders to maintain leveraged positions indefinitely as long as they satisfy margin and funding requirements. In place of an expiry, periodic funding payments between position holders keep the contract price aligned with the underlying asset, a mechanism that has long been standard on crypto trading venues. The products have previously been largely unavailable to U.S. traders.

CFTC Chairman Michael Selig described the decision as the latest step in his effort to bring perpetual products “onshore,” or into the United States and under domestic regulatory supervision. “In my inaugural remarks, I directed the CFTC to use the tools at its disposal to onshore perpetual derivative products so that they can flourish in the U.S., subject to appropriate safeguards,” Selig said.

He described the stock contracts as an extension of the agency’s earlier approval of the first true Bitcoin perpetual futures on a regulated U.S. exchange. Earlier this year, the CFTC cleared Bitcoin perpetual futures for Kalshi, a milestone previously reported by Decrypt.

Selig also argued that regulated U.S. venues provide a safer alternative to offshore platforms. Bringing perpetual products into regulated markets, he said, “ensures that American investors and traders can access these products within the protections of the CFTC’s proven regulatory framework, rather than being forced to turn to offshore, and often unregulated, venues.”

The chairman made a similar argument last week when he cited the record Binance hack while calling for greater U.S. oversight of offshore exchanges.

The equity perpetual futures were deemed approved as security futures products under the Commodity Futures Modernization Act of 2000. As a result, they will be subject to joint oversight from the CFTC and the Securities and Exchange Commission.

Selig credited a memorandum of understanding signed by the two agencies in March with resolving the jurisdictional uncertainty surrounding the products. SEC Chairman Paul Atkins had previously described the situation as a regulatory “no man’s land.”

The approval comes as U.S. regulators and market participants move to bring more perpetual products into domestic markets, with attention now turning to which registered exchanges will list the new stock contracts. The CFTC has floated plans to place crypto exchanges under federal oversight, dismissed a CME lawsuit challenging crypto perpetual futures and cleared the way for Coinbase, which recently filed to list perpetual futures tied to individual stocks including Apple, Tesla and Nvidia.

Selig said the broader objective was to ensure that “the new frontier of finance is built in the United States of America.”

Source: Decrypt