Dragonfly: CME is losing the battle for perps — the future belongs to offshore exchanges
The cryptocurrency derivatives market is undergoing a tectonic shift. Dragonfly fund's Chief Operating Officer, Lindsay Lin, has delivered a verdict that should make the leadership of the Chicago Mercantile Exchange (CME) think twice: in the battle for perpetual contracts (perps), traditional giants are doomed to fail. The essence of the conflict is simple, but its consequences are global.
Why is CME losing?
Lin argues her position by stating that users do not need complex legal structures and artificial restrictions. They need a liquid, convenient tool for speculating on price movements—and perps perfectly fit this description. CME, embroiled in a dispute with the U.S. Commodity Futures Trading Commission (CFTC), is trying to prove that perpetual contracts are not futures due to the absence of an expiration date. However, as the expert rightly notes, this is a formal rather than an essential characteristic.
In practice, traders are not concerned about the settlement date but about the ability to hold a position without the risk of forced closure and without the need for a "rollover." This is how many modern futures already work. Requiring an expiration date for the sake of expiration itself, according to Lin, harms consumers and hinders market development. Cash-settled contracts are essentially standardized instruments for gaining price exposure, and their risk profile is fundamentally close to that of futures: centralized clearing, margin requirements, and netting of payments.
CFTC's position: sensible pragmatism
Lindsay Lin unexpectedly sided with the regulator. In her view, the CFTC is absolutely right to match the risk of a product with the appropriate regulatory regime, rather than clinging to technical differences. Supporting CFTC Chairman Rostin Behnam (note: the original text mentions Mike Selig, but context indicates it refers to the current head) on the issue of bringing products back to the domestic market that are genuinely demanded by consumers is a strategically correct move.
Lin emphasizes that clear regulation in the U.S. will ultimately benefit both consumers and innovation. Without it, demand will continue to flow to offshore platforms (Binance, Bybit, OKX, etc.), which have long captured the lion's share of the perps market. By trying to fight the inevitable, CME only worsens the situation, delaying the process of legalizing and standardizing this instrument.
Analyst's verdict
Personally, I fully agree with Dragonfly's assessment. The market has already voted with its "wallet": trading volumes for perpetual contracts on offshore exchanges far exceed those of CME futures. Fighting this trend is fighting market reality. The only sensible path for CME is not to sue the CFTC but to work with it to develop an adequate regulatory framework for perps. Otherwise, the Chicago exchange risks being permanently sidelined in the fastest-growing segment of crypto derivatives. Regulatory clarity is not an enemy but an ally for bringing capital back to the U.S.