Kalshi’s crypto perpetuals spark debate over whether they’re futures or swaps

Latest developments: Kalshi’s launch of CFTC-regulated crypto perpetuals has reignited a long-running debate over financial market definitions.

• John Lothian and Kalshi’s Udesh Jha joined The Policy Protocol to debate this topic.
• John Lothian, publisher of John Lothian News, argued that perpetual contracts resemble swaps because they involve recurring bilateral cash-flow payments through funding-rate mechanisms.
• Udesh Jha, Kalshi’s head of exchange analytics, countered that perpetuals function like futures because they are exchange-traded, centrally cleared and designed to track underlying spot markets.
• The debate follows the recent approval and launch of crypto perpetuals on Kalshi under CFTC oversight.

The disagreement: Both sides view the same product through different regulatory lenses.

• Lothian said perpetuals differ from traditional futures because funding-rate payments create ongoing cash flows between market participants, a feature he associates with swaps.
• Jha argued that funding rates merely make financing costs explicit rather than embedding them in futures prices, making perpetuals a more efficient version of existing futures markets.
• According to Jha, perpetuals also eliminate the need for traders to roll positions into new contract months, reducing friction and costs.

Why it matters: The classification could determine who can access the products and under what rules.