Perpetual futures and the missing clearing buffer

Last week the Financial Times ran a piece on US retail traders piling into crypto perpetual futures. I was quoted in it. On the design of perps, I said it "provides no buffer when there is a crisis. It's just a hot potato. The more of the market that goes perp, the bigger the issue."

Here is the point behind that line.

Critics in the piece call these products dangerous. I would put it differently. The danger is not the instrument, it is the market structure around it. Perps sit on direct counterparty exposure with no intermediary. When volatility hits, losing positions are liquidated instantly and winning ones can be automatically deleveraged. There is nothing standing in the middle to absorb the shock. That is the "no buffer" problem.

Traditional listed markets solved this a long time ago, with central clearing and QCCP-grade risk management. That is the buffer. Crypto derivatives have grown into a multi-trillion-dollar market without it.

So the real question is not whether perps are too dangerous to exist. People clearly want access to this risk. The real question is why the infrastructure that made the same risk manageable everywhere else has not been built for perps yet.

That is the problem worth solving.

This first appeared on LinkedIn on 21 July 2026. If you want to comment or discuss, that's the place.