Are Crypto Perpetuals Futures or Swaps? Kalshi vs. John Lothian

The debate over whether crypto perpetuals are futures or swaps has ignited a high-stakes clash between regulatory clarity and market innovation. At the heart of the controversy is CalSHE’s newly approved U.S. crypto perpetuals, which the CFTC has classified as futures—allowing retail access and exchange-based trading. John Lothian, a veteran derivatives commentator, argues that perpetuals function more like swaps due to their continuous bilateral funding payments, which mirror swap mechanics. He warns that misclassifying them as futures risks blurring regulatory boundaries, undermining market integrity, and making it harder to explain derivatives to new generations. In response, Udesh Jha of CalSHE defends the futures classification, emphasizing that perpetuals meet all key criteria: exchange-traded, cleared, surveilled, and designed to track the spot price through explicit funding rates. He highlights that CalSHE built its platform with robust surveillance, leverage controls, and pre-trade/post-trade protections—proving its commitment to regulation-first innovation. The episode reveals a deeper tension: CalSHE gains commercial advantage from both classifications—futures status enables retail access, while swap status preempts state gambling laws for its event contracts. Yet the real stakes go beyond labels: they determine who can trade, how money is protected, and whether the U.S. can reclaim global leadership in crypto derivatives from offshore, unregulated markets.