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

Summary

The hosts discuss major crypto policy developments, including the CFTC's 267-page proposed rulemaking on prediction markets, a letter from 60+ CEOs supporting the Blockchain Regulatory Certainty Act, and a debate between John Lothian and Udesh Jha over whether crypto perpetuals are futures or swaps. State-level actions like Illinois' digital asset tax and New York DFS aligning with the GENIUS Act are also covered. The core of the episode is the regulatory classification battle that will determine retail access, market participation, and investor protection for crypto derivatives.

• CFTC proposed rulemaking on event contracts shifts to an industry-friendly approach with a 10-day commission review window.
• More than 60 crypto CEOs signed a letter supporting the BRCA to clarify that non-custodial developers are not money transmitters.
• A new criminal complaint against a centralized mixer uses money laundering charges (1956) rather than unlicensed money transmission (1960).
• John Lothian argues that perpetuals resemble swaps because of periodic bilateral cash flows and fears manipulation around funding deadlines.
• Udesh Jha of Kalshi counters that perpetuals function like futures, with funding rates making cost of carry explicit, and they have robust surveillance.
• Reclassification as swaps could restrict perpetuals to swap execution facilities, shutting out retail investors.
• Illinois enacted a digital asset trading tax, the first state to deliberately target and tax digital asset transactions differently.
• New York DFS proposed regulation to align its stablecoin framework with the federal GENIUS Act to retain licensing authority.