As perpetual futures make their way into regulated markets, a chorus of critics warns that the contracts could import systemic risk into the traditional financial system. But that concern misses the mark, according to Chris Tyrer, President of Bullish Exchange, who argues the danger lies in how trading venues are designed — not in the instrument itself.
Where the Real Risk Lives
The debate over perpetual futures has intensified as these once crypto-native products migrate into regulated environments. Perpetuals differ from traditional futures in one crucial way: they have no expiry date, relying instead on a periodic funding mechanism to keep prices tethered to the underlying asset.
Critics contend that this structure, combined with the high leverage often available in crypto markets, makes perpetuals inherently destabilizing. Tyrer pushes back on that framing, suggesting the conversation has been aimed at the wrong target entirely.
The contract is not the hazard — the venue that lists it is.
According to this view, the systemic risk attributed to perpetuals actually stems from choices made at the exchange level. Leverage caps, margin requirements, how price indexes are constructed, and the procedures for handling defaults all determine whether a product amplifies or contains stress during volatile periods.
Venue Design as the Deciding Factor
The argument reframes the regulatory question. Rather than asking whether perpetual futures belong in regulated markets, policymakers and exchanges should scrutinize the guardrails surrounding them. A well-designed venue can offer the same instrument with dramatically different risk profiles.
Several design elements sit at the heart of this distinction:
- Leverage limits that constrain how much exposure traders can take on
- Margin rules that dictate the collateral required to hold positions
- Index construction methods that determine how reference prices are set
- Default handling procedures that manage losses when traders cannot meet obligations
For established exchanges entering the regulated arena, these are the levers that separate a resilient marketplace from a fragile one. The implication is that robust operational standards, not outright restrictions on the product, are what will keep perpetuals from destabilizing broader markets as adoption grows.
The perspective carries added weight given its source. As perpetuals continue their crossover into mainstream finance, the framing invites regulators to focus their attention on venue-level safeguards rather than treating the contract as an inherent threat.