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Don Wilson, the founder and CEO of trading giant DRW, went on a tear against regulators over their understanding of perpetual futures. In a series of posts on X on July 28, Wilson laid out a case that the people writing the rules for perps are fundamentally confused about what these instruments actually are.
His core argument is deceptively simple: perpetual futures are just futures contracts without expiration dates. That’s it. The scary stuff, like 100x leverage and auto-deleveraging mechanisms, comes from choices made by specific crypto exchanges, not from anything baked into the contract structure itself.
The distinction regulators keep missing
The high leverage that makes perps controversial? That’s a parameter set by exchanges like Binance or Bybit. Auto-deleveraging, the mechanism where profitable traders get their positions forcibly reduced when the insurance fund runs low? Wilson calls that unnecessary for the proper functioning of perps. It’s a band-aid solution that specific platforms chose to implement, not a fundamental requirement of the instrument.
In Wilson’s framing, perps reduce transaction costs, minimize market impact, and provide more efficient tracking of the futures curve compared to traditional dated contracts that need to be rolled every month or quarter.
In English: instead of paying fees and eating slippage every time you roll a March contract into a June contract, perps let you maintain continuous exposure.
Real-time settlement changes the risk equation
Wilson pointed to another dimension that regulators appear to be underweighting: the impact of digital payment rails on risk management. With real-time settlement technology, margin requirements can be recalculated continuously rather than at fixed intervals.
Traditional futures markets settle margin calls once or twice a day. If a position blows up between settlement windows, that creates systemic risk. Real-time margining, enabled by blockchain-based payment infrastructure, allows for immediate adjustments to collateral requirements during active trading.
Continuous margin recalculation could actually reduce initial margin requirements because the system can respond to adverse price moves in real time rather than needing to build in a buffer for overnight gaps.
Wilson’s history with regulators adds context
Wilson isn’t some crypto-native founder lobbing complaints from the sidelines. DRW is one of the largest proprietary trading firms in the world, with deep roots in traditional derivatives markets. Wilson has a lengthy history of interacting with US regulators, including past legal disputes with the CFTC.
Wilson pushed for broader acceptance of perps across other trading sectors, including commodities and securities. He’s not alone in that push. Prediction market platform Kalshi has proposed expanding into precious metals perpetual futures, signaling that interest in regulated perp products is growing beyond crypto’s borders.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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