Wall Street veteran Don Wilson says regulators are getting perps all wrong

We have a bad habit in this industry of letting the loudest, most reckless voices define our tools. When people hear perpetual futures, or perps, they usually think of 100x leverage on a meme coin and a quick liquidation notice. That image is what regulators are currently obsessed with, and frankly, it is standing in the way of meaningful infrastructure growth.

The Perception Gap

Don Wilson, the founder and CEO of DRW, has been banging the drum on this lately. If you don't know Wilson, he is not some fly-by-night crypto influencer. He is a Wall Street veteran who understands liquidity, risk, and derivatives better than almost anyone in the legacy finance space. His take is simple: regulators are getting perps all wrong because they view them through the lens of retail gambling rather than structural efficiency.

To the average regulator, a perpetual future looks like a dangerous casino game. It is a product that never expires, allowing traders to stay in positions indefinitely as long as they can fund the margin. Because these products originated in the offshore crypto markets to bypass legacy banking hurdles, they carry a stigma. But if you strip away the branding, you are looking at one of the most significant innovations in capital efficiency we have seen in decades.

Why Builders Should Care About Perps

As a founder, you have to look past the price action. The real value of a perpetual swap is its ability to track an underlying asset's price without the friction of a settlement date. In traditional finance, futures markets are fragmented by months—March, June, September. This creates rolled-over costs and liquidity gaps that hurt small players and mid-sized builders the most.

Perps solve this by consolidating all that liquidity into a single, continuous instrument. For a developer building a decentralized application or a payment gateway that needs to hedge against volatility, perps are objectively better than traditional futures. They are simpler to integrate, easier to manage, and more capital efficient. When regulators try to ban or stifle these tools, they aren't just stopping gamblers; they are making it harder for builders to manage risk.

The Misunderstanding of Risk

The core of the regulatory argument is that perps invite systemic risk. But Wilson’s point, which I tend to agree with, is that the risk isn't in the product itself—it is in the lack of transparency and the way leverage is managed. In a transparent, on-chain environment, perps are actually less risky than the opaque, over-the-counter derivatives that blew up the global economy in 2008.

The irony is that regulators are pushing traders toward less transparent, offshore venues by refusing to build a sensible framework for perps at home. We are repeating the mistakes of the past by fearing the technology rather than regulating the behavior.

If we had a clear pathway for these derivatives in the U.S. and other major markets, we would see massive institutional inflows that would actually stabilize prices. Instead, we have a stalemate. Regulators see a weapon; builders see a tool.

The Path Forward for Founders

If you are building in this space, you can't wait for the SEC or the CFTC to have an epiphany. You have to design your systems for the reality of the current landscape while advocating for the efficiency of the tech. We need to move the conversation away from leverage and toward utility. How does a perpetual swap help a cross-border merchant? How does it help a liquidity provider remain solvent during a flash crash?

We also need to be honest about the flaws. The funding rate mechanism—the way the price of the perp is kept in line with the index price—can be volatile. It requires sophisticated management. But calling the entire asset class a net-negative for the market is lazy. It is the kind of thinking that keeps us stuck in the legacy T+2 settlement world while the rest of the world is moving to T+Zero.

A Founder's Takeaway

Don Wilson is right to be frustrated. We have a piece of financial engineering that effectively solves the liquidity fragmentation problem, and it is being treated like a blackjack table. For those of us on the ground building the next generation of financial apps, the goal is to prove the utility through execution.

• Perpetuals are not just for trading; they are for hedging operational risk.
• Consolidated liquidity is objectively better for market health than fragmented settlement dates.
• Transparency through code is the real solution to risk, not blanket bans on specific instrument types.

The regulatory pendulum will eventually swing back toward common sense, but only if the industry can demonstrate that these tools have a purpose beyond speculation. We need to stop talking about 100x gains and start talking about capital efficiency. That is how we win the argument.

Read the original at CoinDesk →