The profound impact of the Trump administration's regulatory approach on the cryptocurrency sector is now actively influencing the transformation of the traditional financial industry.

At a recent crypto venture capital luncheon in New York, attendees were asked to assess the legacy of Donald Trump, widely regarded as the first U.S. president with a friendly stance toward the crypto industry. Opinions were sharply divided. While participants acknowledged that his administration fostered a more relaxed and accommodating regulatory environment, they also pointed out that Trump personally reaped enormous financial gains from crypto-related ventures, which significantly damaged the industry's public reputation. Last year, Trump's family-linked crypto businesses reportedly generated $14 billion in revenue, a sum exceeding the total annual profits of all U.S.-based crypto companies combined. This windfall occurred against the backdrop of a severe crypto market downturn, with numerous firms facing pressure to cut staff and shutter operations.

The most enduring impact of the Trump era may be the successful establishment of several crypto market innovations within the U.S. regulatory perimeter, which are now compelling traditional finance to adapt. Since last year, the regulatory framework has rapidly legitimized a range of crypto financial products, including stablecoins, prediction markets, and tokenized stocks. Once niche instruments popular only among specialized crypto traders, these products have evolved into mature markets possessing formal financial attributes.

Perpetual futures contracts serve as the latest symbol of this shift. Previously popular on overseas exchanges like Binance and Hyperliquid, these derivatives were a primary tool for traders to use leverage to bet on cryptocurrency prices. They allow traders to take perpetual long or short positions on underlying assets, amplifying gains and losses using borrowed funds.

While U.S.-regulated exchanges were previously barred from offering these products to domestic users, the Commodity Futures Trading Commission (CFTC) granted its first approval for a compliant perpetual contract in May of this year. Subsequently, platforms including Kalshi, Coinbase, and Kraken have launched crypto perpetual contracts for U.S. customers. Kalshi and others even plan to apply this trading mechanism to a broader range of assets, enabling investors to conduct similar leveraged trades on the forward prices of stocks, crude oil, gold, and other commodities.

Proponents of perpetual contracts often argue they are more intuitive for average investors than traditional futures. For instance, with no expiration date, investors avoid the costly and complex process of frequently rolling over expiring contracts.

The reaction from major traditional financial institutions—many of which primarily serve high-net-worth institutional clients rather than retail investors—indicates they view perpetual contracts as a genuine competitive threat. The world's largest derivatives exchange, CME Group Inc, filed a lawsuit last month against the CFTC over its approval of these products, alleging the regulator bypassed established congressional oversight frameworks and failed to follow proper rulemaking procedures. Outgoing CME Group Inc CEO Terry Duffy issued a warning, likening perpetual contracts to "a casino on an exchange" that could attract retail investors who do not understand the risks of leverage.

Objectively speaking, perpetual contracts have significant drawbacks for both retail and institutional traders.

First, while traders save on rollover costs, they must pay periodic funding fees to maintain their positions. This fee mechanism, designed to tether the contract price to the spot price, fluctuates with market conditions.

Second, the product structure of perpetual contracts is ill-suited for institutional hedging. The lack of an expiration date makes it difficult to match the specific needs of physical businesses. For example, a farmer cannot use such a contract to lock in a grain delivery price for the autumn harvest, nor can an airline hedge its fuel procurement costs for a specific month. Most financial institutions are already accustomed to privately customizing swap contracts with banks to precisely meet their hedging requirements.

There is also growing concern that speculative trading in perpetual contracts could distort the prices of underlying physical commodities, with ripple effects reaching the real economy. If prices for essential commodities like grain or crude oil become volatile due to such activity, it quickly escalates into a political issue. Kalshi CEO Tarek Mansour acknowledged at a Bloomberg market structure forum in June that, due to concerns from Congress—particularly from members of the Agriculture Committee, which oversees commodity trading—the company is holding off on launching perpetual contracts for agricultural products.

He stated, "The Agriculture Committee members' perspective is reasonable. They are more comfortable with the natural weekly cycle of traditional contracts expiring on a Friday, avoiding weekend worries about grain prices being disrupted by speculation. This regulatory logic has solid merit."