The US crypto derivatives market has just opened to perpetual contracts, and the debate surrounding the risks of such products has intensified. CME Group CEO Terry Duffy believes that high leverage and automatic liquidation mechanisms could amplify retail investor losses and raises questions about the approval process.

The focus is on high leverage

Speaking at a trading and fintech conference on June 4, he said that crypto perpetual contracts are "like a disaster waiting to happen." In his view, these products have no expiration date, allow traders to hold positions for a long time, and have high leverage, making them quite risky.

Duffy noted that some perpetual contracts allow positions to be leveraged up to 50 times the margin. If investors do not fully understand the impact of funding rates, carrying costs, and price volatility, the automatic liquidation mechanism could amplify losses in a short period.

Multiple platforms are accelerating their launch.

This statement comes shortly after the U.S. Commodity Futures Trading Commission (CFTC) approved the first batch of compliant crypto perpetual contracts for U.S. participants on May 29, marking the beginning of the opening of this market, which has long been dominated by offshore exchanges, to U.S. domestic institutions.

Subsequently, several companies quickly advanced their deployments. Kalshi launched perpetual contracts for Bitcoin and Ethereum; in addition, 11 crypto contracts have been submitted for regulatory review, involving assets such as Solana and Dogecoin, but they still need to be approved one by one before they can be traded.

Coinbase Financial Markets has also received regulatory guidance allowing eligible U.S. institutional clients to trade Deribit-listed perpetual contracts and options. Kraken has stated its plans to launch compliant Bitcoin perpetual contracts through the Bitnomial Exchange.

CME questions the speed of the approval process.

In addition to product risks, Duffy also criticized the approval process. He believes that regulators rushed through the review of these complex, highly leveraged new derivatives without conducting the necessary thorough assessments.

However, he also noted that institutional investor demand for these products remains limited. According to him, approximately 85% to 90% of CME's trading volume comes from institutional clients, and analysts covering the firm do not view perpetual contracts as a direct alternative to traditional futures.