Transactions surge, consumer groups call on the U.S. to strengthen regulation of crypto-perpetual co

Perpetual contract trading volume surges, consumer rights groups call for stronger regulation

As retail investors set records in the cryptocurrency perpetual contract market, several consumer rights groups in the United States are stepping up efforts to promote regulatory measures for these high-risk financial instruments.

Rights groups drive policy formulation behind the scenes

These groups are not limited to congressional lobbying, but influence regulation through formal channels. The means include submitting public comment letters, filing court briefs, and urging federal and state regulators to implement strict measures before new regulations on the digital asset market take effect.

Better Markets, a Washington, D.C. -based nonprofit organization, is one of the most active. The organization, led by Dennis Kelleher, a former lawyer at Starton Law Firm, is committed to promoting stricter regulation of the entire financial market, including cryptocurrency products.

According to Better Markets, they have submitted more than 500 comment letters to regulators, with recommendations cited more than 180 times in the final rule. The organization also frequently submits court briefs to support strengthened supervision.

In July 2026, Better Markets issued an opinion on the National Credit Union Administration's proposed stablecoin policy, expressing concerns about credit unions 'possible exposure to cryptocurrency risks. Christopher Appel, the group's director of banking policy, believes the policy poses significant risks to credit unions in the absence of adequate protections.

Christopher Appel criticized the authority's stablecoin proposal, pointing to recurring issues such as the lack of clear capital standards, insufficient diversification of reserves, and limited measures to address broader financial stability risks associated with stablecoins.

Although the letter focuses on stablecoins, it demonstrates how rights groups are beginning to shape future digital asset regulation years before the new rules are implemented. Their continued dialogue with federal agencies, legal action, and continued policy engagement can influence the specific wording of the new rules-including those rules for cryptocurrency perpetual contracts that are still being developed.

These efforts are receiving more attention as perpetual contracts continue to operate in the absence of clear supervision by U.S. authorities.

Regulators concerned about surge in perpetual contract activity

Perpetual contracts have quickly become a core component of the cryptocurrency market, triggering increased scrutiny by regulators. Unlike traditional futures contracts, perpetual contracts have no expiration date and traders can hold leveraged positions indefinitely through a funding rate mechanism, which brings contract prices in line with the spot market.

According to research from Cornell University, approximately 93% of cryptocurrency derivative transactions involve perpetual contracts. Data from a16z, a venture capital firm active in the cryptocurrency field, shows that centralized exchanges processed US$86.2 trillion in perpetual contract transactions last year, a year-on-year increase of 47%. Decentralized exchanges have also achieved significant growth, with transaction volume reaching US$6.7 trillion, a year-on-year increase of 346%.

Major media outlets such as the Financial Times have described perpetual contracts as one of the most dangerous tools in cryptocurrencies, highlighting growing concerns among policymakers and investors.

Key risks faced by retail investors

Consumer rights groups have identified several core risks associated with cryptocurrency perpetual contracts:

High leverage: Some trading platforms offer leverage of up to 100 times, so even a 1% unfavorable change in price could cause a position to be completely zeroed.

Continuous trading: Unlike traditional markets, cryptocurrency perpetual contracts are traded around the clock. This continuous accessibility increases the possibility of sudden losses occurring outside normal trading hours.

Automatic clearing: When margin requirements are violated, the system automatically liquidates positions, and traders often have no time to respond during periods of market fluctuations.

Funding rate payment: Since there is no expiration date, traders need to pay or collect funding fees regularly to link the contract price to the underlying spot price. These costs can accumulate, especially for long-term positions, and can result in significant losses.

Platforms typically allow leverage from 1X to 100X or even higher. Blockchain analytics firm Chainalysis has emphasized that positions can be quickly liquidated under volatile conditions, causing huge and rapid losses to investors.

Cornell University research found that while perpetual contracts bring additional liquidity to the cryptocurrency market, the funding rate system and widely used leverage often increase transaction costs and risks for traders.

Small Dictionary: Capital rate mechanism-A system used in perpetual contracts that brings the price of derivatives into line with the spot price of the underlying asset by requiring traders to pay or collect regular fees based on the difference between the contract price and the spot price.

Rights groups warn that many retail investors underestimate the dangers posed by high leverage, automated clearing capabilities and the continuously trading nature of these markets.

The regulatory landscape is unclear

Discussions on how to regulate perpetual contracts in the United States are still ongoing. Chainalysis pointed out that most perpetual contract transactions occur on offshore exchanges, beyond the direct jurisdiction of U.S. authorities, while a16z pointed out that major centralized and decentralized platforms currently restrict U.S. customers 'direct access to these products.

The Commodity Futures Trading Commission, which oversees U.S. derivatives, faces limited enforcement options because trading activity is concentrated overseas.

Although economist Robert Shearer first proposed the concept of perpetual contracts in 1993, and the cryptocurrency version became popular after the launch of BitMEX in 2016, U.S. regulation has not yet kept pace with the reality of global transactions.

Retail participation has grown steadily, with perpetual contracts based on real-world assets now accounting for 44% of trading volume on some exchanges, such as Hyperliquid. This increasingly global and decentralized trading environment has exacerbated differences between how products are used and where, as well as the jurisdiction of authorities. Consumer groups believe the gap puts investors at risk and have driven them to call for stronger regulation.

As perpetual contracts remain one of the most controversial and dangerous products in cryptocurrency finance, rights groups continue to push for rules to deal with high-leverage, all-weather trading and mechanisms that can quickly drain retail capital.