Home›Crypto›Market Structure›Perpetual futures systemic-risk debate targets venues,…

Perpetual futures systemic-risk debate targets venues, not the contract

CoinDesk reports that critics linking perpetuals to systemic risk should focus on venue design, including leverage caps, margin rules, and default handling.

Reported · Written up by our desk · Market Structure

Perpetual futures are entering regulated markets, and a common objection is that retail-driven, high-leverage perpetuals can import systemic risk, but CoinDesk argues the critique is aimed at the wrong target. According to the outlet, systemic risk is shaped by where the contracts trade, not by the no-expiry contract structure itself.

CoinDesk cites Chris Tyrer, President of Bullish Exchange, saying the key risk factors are venue choices such as leverage caps, margin and funding design, and how defaults are handled under stress. The outlet points to crypto’s deleveraging episodes, including an October 2025 cascade among the most recent examples, where sell-offs were intensified by liquidation cascades tied to venue mechanics.

In that view, a liquidation cascade becomes system-wide when forced liquidations depress prices and transmit losses across venues through shared reference pricing and arbitrage, triggering additional liquidations. CoinDesk adds that the severity of such cascades can be driven by venue design elements like a manipulable index that triggers liquidations on false prices and auto-deleveraging that reduces profitable positions to cover shortfalls.

CoinDesk also notes that beyond contract mechanics, regulatory baseline measures such as segregated funds, a registered clearing entity, and supervisor oversight are viewed as necessary for safer market operation. Separately, the outlet references a recent JPMorgan note that found limited institutional appetite for perpetuals, describing them as speculative rather than a substitute for regulated futures due to factors including variable funding and basis risk, while also saying many institutions use perpetuals to hedge options delta rather than as a direct replacement for dated futures.

More like this

Sources