The launch of CFTC-regulated crypto perpetuals on Kalshi has reignited a debate over how U.S. regulators should classify these contracts. John Lothian, publisher of John Lothian News, argues that perpetuals resemble swaps due to recurring funding-rate payments creating bilateral cash flows. Udesh Jha, Kalshi's head of exchange analytics, counters that perpetuals function like futures because they are exchange-traded, centrally cleared, and track underlying spot markets. The classification could determine retail access, regulatory treatment, and market structure. Lothian warns of manipulation risks from funding-rate windows, while Jha says continuous calculation reduces such risks. The debate underscores challenges in applying traditional definitions to new products.

Key facts

• Kalshi launched CFTC-regulated crypto perpetuals, sparking classification debate.
• Lothian argues perpetuals are swaps due to funding-rate cash flows.
• Jha says perpetuals are futures as exchange-traded and centrally cleared.
• Classification may affect retail access, tax treatment, and market dynamics.
• Manipulation concerns: funding-rate windows vs. continuous calculation.