CFTC Approves Perpetual Index Futures for Coinbase

The Commodity Futures Trading Commission (CFTC) has allowed Coinbase to convert its long-dated index futures into perpetual contracts without expiration dates. The CFTC's Division of Market Oversight granted this relief in response to Coinbase's request, filed on October 1. This change applies to futures on broad-based security indices, such as the S&P 500, and turns contracts with up to 25-year expiries into true perpetuals.

Perpetual futures use funding payments instead of expiry dates to align their prices with the underlying assets. The CFTC's decision builds on an earlier filing by KalshiEX, which sought approval for a similar contract. The CFTC deemed KalshiEX's perpetual futures contract approved on October 2, setting a precedent for Coinbase's request.

The CFTC emphasized the need for caution in converting existing contracts. Exchanges must notify traders with open positions, give them at least five days to exit, and provide risk disclosures. The changes must be filed under specific regulations, and the CFTC reserved the right to modify or end the relief.

This relief does not extend to individual stocks or exchange-traded funds, which were listed as pending approval at the time. The CFTC also noted that existing contracts may still price differently from true perpetuals, despite identical funding mechanisms.