How a stalled crypto law could reshape global derivatives trading
Cryptocurrency markets are built on innovation, speed, and a belief that technology can transform traditional finance. But when regulation struggles to keep pace, a different reality can emerge, uncertainty, fragmentation, and competitive disadvantage. Now here is this clearer than in the debate over perpetual futures, or perps a type of derivative that lets traders speculate on price movements without an expiration date. If U.S. lawmakers fail to provide clear regulations for these powerful products, on-chain perps may remain offshore, leaving American traders shut out of one of crypto’s most liquid and essential markets.
The crux of the issue is the Digital Asset Market CLARITY Act, or CLARITY Act, a bill passed by the U.S. House of Representatives that seeks to establish a federal regulatory framework for digital commodities and trading infrastructure. While the Act aims to bring clarity and certainty to crypto market structure, it currently does not address derivatives such as perpetual futures. That omission leaves a significant gap in U.S. crypto law and exposes perpetual futures to potential enforcement action rather than structured compliance.
Perpetual futures have become the dominant form of derivatives trading in crypto. Unlike traditional futures that settle on a fixed date, perps use continuous funding rates to keep prices aligned with the spot market. This simplicity and flexibility have made them attractive to traders around the world and have driven massive trading volumes accounting for roughly 75 percent of all crypto derivatives activity. But because perps do not fit neatly into existing definitions under U.S. commodities and securities law, regulators have struggled to define how they should be offered or supervised.
What Is the CLARITY Act and Why Does It Matter?
The Digital Asset Market CLARITY Act represents a major legislative effort to provide long awaited regulatory certainty for digital asset markets. Drafted in 2025 and passed by the House, the bill sets out definitions for digital commodities, establishes a regulatory regime for exchanges and brokers, and seeks to clarify which federal agencies have authority over different types of crypto assets. If enacted, the CLARITY Act could be one of the most comprehensive crypto regulatory laws in U.S. history.
Yet even as policymakers work toward final passage, a key limitation has emerged: the current draft of the bill excludes derivatives, including perpetual futures. That means that while the framework could govern spot exchanges and certain token categories, it leaves the most actively traded crypto financial instruments in limbo. Without a clear statutory basis, platforms offering perps to U.S. users risk enforcement actions or uncertain compliance requirements.
Regulators from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have acknowledged the need for clarity. Joint initiatives, such as “Project Crypto”, aim to modernize rulemaking and clarify which digital assets fall under agency authority including exploring frameworks for tokenized collateral and derivatives. But without legislation that specifically addresses products like perps, regulators are constrained by legal ambiguity and existing statutes that were not designed for modern crypto derivatives.
Offshore Dominance and U.S. Market Constraints
Because of this regulatory uncertainty, much of the world’s perpetual futures trading occurs offshore, on platforms that operate outside stringent U.S. oversight. These venues have no domestic legal barriers to offering leveraged perps, and they attract both retail and institutional traders seeking efficient access to risk management tools and speculative products. Onshore alternatives, where they exist, tend to offer more constrained versions of these products or operate under strict compliance frameworks that limit liquidity and innovation.
A lack of clear derivatives law doesn’t just reduce on-shore access it shifts economic activity. Offshore platforms attract trading volume, liquidity, and innovation. Users who want full access to perps may be forced to use foreign platforms, exposing themselves to different legal regimes, greater counterparty risk, and fewer consumer protections. And for U.S. crypto firms, the calculus becomes even starker: compete under unclear regulation or locate operations in jurisdictions with defined legal regimes.
The Rise of Policy Advocacy in DeFi
Faced with this challenge, some decentralized finance (DeFi) projects are taking unusual steps. One example is the Hyperliquid Policy Center, a Washington, D.C.-based organization seeded with $28 million in native token funding to influence the regulatory conversation around perpetual futures. Rather than relying solely on traditional lobbying, Hyperliquid’s model embeds policy advocacy into the product and ecosystem itself, aiming to make lawmakers more comfortable with on-chain perps before broad enforcement or prohibitions take hold.
This shift reflects a broader trend: the era when code alone could “route around regulation” is ending. As DeFi protocols grow in economic significance with billions in open interest and hundreds of billions in trading volume lawmakers and regulators increasingly treat them as critical market infrastructure rather than fringe experiments. That means engagement with policy, legal frameworks, and legislative processes is no longer optional for projects that want to operate in major markets like the United States.
Possible Futures for Perpetual Futures in the U.S.
If the CLARITY Act or a similar regulatory framework is ultimately passed with provisions that explicitly address derivatives, it could transform the U.S. market. A clear legal basis for on-chain perps would allow compliant venues and protocols to operate domestically, offer products that attract both retail and institutional traders, and maintain high standards of consumer protection and market integrity. This would strengthen the competitive position of U.S.-based exchanges and DeFi platforms and reduce the need for traders to go offshore.
In this scenario, regulators could define how perps should be treated under commodities law, how funding rates and leverage are handled, and what reporting or risk-management standards apply. That clarity could unlock deeper liquidity, broader participation, and greater integration of crypto derivatives into mainstream finance. It would also provide legal certainty for startups and established firms alike, encouraging investment and innovation that might otherwise flee to friendlier jurisdictions.
However, if CLARITY stalls in the U.S. Senate or moves forward without derivatives language, the current imbalance is likely to persist. Offshore exchanges and protocols will continue to dominate perpetual futures markets, and domestic traders will remain constrained by compliance concerns and limited product availability. In the longer term, this could push more trading activity and the talent that supports it outside the U.S., diminishing the country’s role in shaping the future of crypto finance.
The Broader Stakes for Crypto Innovation
The debate over perpetual futures is about more than one class of financial instrument. It symbolizes the challenge of bringing fast-moving technology into legal frameworks designed for a different era. Stablecoins have already seen progress: the GENIUS Act established a federal framework for stablecoin regulation, offering clarity for payment rails while trading rails lag behind. That disparity highlights the priorities and discord within U.S. crypto policy.
For policymakers, the choice is stark embrace regulation that enables innovation or let uncertainty push markets and capital abroad. For traders and innovators, the message is clear regulatory clarity matters. Without it, the promise of decentralized finance and tokenized markets will remain constrained by legal risk and offshore competition. As Washington continues its debate, the decisions made today will influence where the next generation of financial infrastructure develops and who gets to participate fully in that future.
