Wall Street’s existential crisis over its eternal future: 24/7 security on steroids has become a veritable emergency.

One older trader says: “Don’t build a position that keeps you up at night.”

Perpetual futures, known as “perps” for short, are designed to literally do the opposite.

Blockchain-enabled, 24/7 trading, perpetual “futures” (a label currently being legally challenged by the Chicago Mercantile Exchange) are growing rapidly overseas and nearly monopolizing the attention of the largest IPO in history, knocking $18 billion off its total market value. CME Group, CBOE Global Market, intercontinental exchange and miami international holdings within 2 days.

After President Trump’s press conference on Wednesday hinted at a path toward CFTC regulation of HyperLiquid, a fast-growing decentralized exchange for criminal trading, Wall Street’s strategy may need to lean more towards hugging than fighting.

In its simplest form, perpetuity can be thought of as a bet that never expires. It can track almost any asset class, trade 24 hours a day, and offer tons of leverage.

Investors fear the perpetrators will disrupt the traditional exchange business model. Exchanges make a lot of money from so-called roll-in derivatives, where traders extend the life of expiring contracts by selling contracts that are close to expiration and buying contracts with longer expirations. Perpetual contracts have no expiry date, eliminating the need to enter into a contract and depriving exchanges of a lucrative revenue stream. While the initial approval for perpetual futures trading in the United States was limited to cryptocurrencies, the president’s comments this week suggest that regulated futures trading may soon become available in traditional asset classes such as stocks and commodities, which have soared in popularity with hyperliquids this year.

“Traditional exchange economics could be called into question,” said one current director of a listed exchange, speaking on condition of anonymity. “Perpetual futures, the expansion of zero DTE, and expanded trading are all responses to an increasingly competitive market where investors expect continued access.”

Brokers and exchanges have extended trading hours in recent years. Charles Schwab’s TD Ameritrade pioneered “24/7” trading in 2018, with the London Stock Exchange set to join next year, and most brokers now join Cboe in offering some form of trading in major securities, including index options, on all days except Saturdays and Sundays. The calendar also expanded from the inside out, with options expiring monthly, then weekly, and finally on the same day. In that context, perpetual futures with their origins in cryptocurrencies, an asset class whose appeal largely stems from continued access, seem like a natural next step.

However, some investors and observers point out that the product’s internal leverage is a source of concern and controversy.

While prediction markets Kalshi and centralized crypto exchanges like Coinbase and Binance have shined a light on this asset class, it is decentralized Hyperliquid that dominates this emerging space. Data compiled by executives at HyperLiquid Strategies (PURR), a publicly traded treasury firm that invests in the tokens behind the exchange blockchain, is a trade settlement blockchain that has teamed up with market operator Trade (XYZ) to create HyperLiquid

In March, Trade (XYZ) received an exclusive license from S&P Dow Jones Indices to trade perpetual derivatives on the benchmark stock index S&P 500. In May, the CFTC approved perpetual futures for Bitcoin, making Kalsi the first regulated domestic operator to offer perpetual derivatives, an event that caused stock prices on legacy exchanges to plummet.

Permanent investments are most popular with individual investors, but there are signs of increasing interest from institutional investors as well.

“It’s a retail-focused product, but there’s already some organized activity going on,” said Ram Vittal, CEO of the market maker and financial services company. marex group‘s stock price is up more than 80% this year. Marex covers perpetual futures with other underlying assets around the world and has launched the cryptocurrency Purp in London. “Marex is happy to extend its services to regulated venues in the U.S., regardless of their underlying origins, to support our clients’ needs,” Vital added.

It’s hard not to think that Hyperliquid’s Perps Exchange is one of the most attractive use cases for blockchain to date. Activities on the exchange are powered by HYPE, a cryptographic token whose value is derived in part from fees collected from transactions. HYPE is up 196% this year and is a leading stock in S&P’s new Pantera Digital Asset Index, which tracks income-generating crypto projects.

Given HyperLiquid’s success (averaging $9.6 billion in perpetual notional value on a daily basis in June), many large incumbent players have already laid the groundwork for related styles of derivatives trading. Robinhood Markets offers perpetual cryptocurrencies to customers in Europe, and Cboe launched “continuation futures” with 120 months to maturity late last year.

Even CME CEO and Chairman Terry Duffy, who has been one of Perpetual’s most vocal critics, said on the company’s most recent earnings call that CME “has contract specifications and is prepared to bring these products to market as demand evolves and structural changes make it appropriate.”

“But we have not heard any requests from customers for these products,” he added.

The drop in exchange stock prices is worrying executives in Chicago and New York, according to on- and off-the-record conversations with executives. This is especially true for Cboe. At Cboe, options are synonymous with risk management rather than risk-taking, expiration is a key feature rather than a bug, and it allows both large and small investors to define risk. Data provided by the exchange shows that even in zero-day expiry markets, more than 90% of trades are conducted with risk limits.

“Purps as an options replacement is the limit for me,” Rob Hocking, Cboe’s global head of derivatives, said in an interview. “Zero DTE options offer asymmetric payouts with unlimited potential, and in most cases, it is the option premium that the customer is most likely to lose.”

It’s a sentiment shared by high-tech derivatives powers. NasdaqBut perpetual futures pose another challenge for both Nasdaq and ICE, owner of the New York Stock Exchange. How will the IPO and public listing business change in a world where private companies can find significant liquidity and price discovery online?

In the run-up to SpaceX’s $1.8 trillion Nasdaq IPO, HyperLiquid’s accomplishments shined by many measures. On the day of the listing, more than 7 million SpaceX PERPs worth $1.2 billion were traded on Hyperliquid, with SpaceX PERP ultimately trading just a few dollars away from when shares first traded at $150. Trading in stocks like SpaceX and SK Hynix has exploded this year, and TradeXYZ’s trading volume has grown to just under $500 billion thanks to the popularity of “real world” assets, said Patrick Morley, senior research analyst at Piper Sandler.

“Part of the appeal of PERP is that it’s open 24/7,” said Stephen O’Connor, vice president of U.S. options analysis and product innovation at Nasdaq. “But true price discovery requires the liquidity that public markets provide.”

The direction in which perpetuals feed into existing market structures depends first on what you call them. CME’s Duffy sued the Commodity Futures Trading Commission in June over its approval of Bitcoin PERP for Kalsi, arguing that the product should be classified as a swap rather than a futures.

“We don’t take this lightly,” Duffy told CNBC shortly before filing the lawsuit.

This is the first significant legal battle for the asset class. That’s because swaps and futures have very different regulatory implications for how much capital financial institutions that list and trade them need to set aside for margin, risk and tax requirements. The CFTC called the lawsuit “frivolous.”

The exchange-traded fund industry is also having a major impact, with issuers turning to the swap market for custom products that are fueling the explosive growth of leveraged ETFs. If ETF issuers could use PERP instead, it could reduce costs and income for swap dealers, who are primarily banks.

The Commodity Exchange Act of 1936 uses the phrase “a contract to sell a commodity for future delivery” when describing a futures contract, which ostensibly contradicts several defining characteristics of a perpetual contract that never expires or delivers the underlying asset. The 2010 Dodd-Frank Act separates the two, stating that financial instruments defined as futures cannot be swaps. This means that if PERP were classified as a swap, it would impose stricter capital requirements, especially for Kalshi and Polymarket, which operate their own clearinghouses.

“We disagree on the characterization of that (exchange),” Diana Elizabeth, Carsi’s communications director, said in an email. “CME’s case is not about the law, it’s about fear of competition. With PERP, you pay a fee once and can exit your position whenever you want. The end result is a cheaper and simpler product for the end consumer.”

The CFTC declined to comment on the lawsuit.

Whether it’s futures or swaps, one thing is clear: PERP has enough supporters to get Wall Street’s attention. Kalshi has traded over $20 billion in perpetual transactions within the first month of launch, and the company has filed PERPs for gold, silver, and platinum, and has more products in the works.

Combined nominal PERP trading volume on centralized and decentralized exchanges has averaged about $150 billion per day this year, down from a high of nearly $200 billion per day last year, according to data compiled by CNBC. Although it is difficult to compare PERP volume to traditional futures and options markets because Perp does not have a standard contract size, the notional value of options trades on the S&P 500 index typically ranges from $2 to $3 trillion on any given day.

Total protocol revenue for the Hyperliquid platform peaked at $357 million last year, but fell to $200 million as of last quarter as blockchain builders launched new markets and took a larger share of the revenue, according to data analyzed by CoinDesk. Cboe posted revenue of more than $700 million last quarter, up 25% year over year.

One likely outcome is a form of hybridization between existing crypto exchanges and crypto exchanges with perpetual issuance.

In March, New York Stock Exchange owner ICE announced a $200 million investment in international cryptocurrency exchange OKX, valuing the business at $25 billion in a 50-50 joint venture called OKXICE to launch tokenized stocks and crypto futures. OKX offers perpetual shares called “swaps” of Mag-7 shares.

Similarly, Eurex owner Deutsche Börse Group expanded its relationship last year by partnering with cryptocurrency exchange Kraken and acquiring a $200 million stake in Kraken operator Payward. Kraken offers rewards with up to 50x leverage on a variety of products.

“This is probably the most exciting time for the futures industry since the beginning of financial contracts in the 70s,” said an executive at a large futures clearing company, who requested anonymity to discuss comments that could be seen as critical by regulators. “Competition creates new products and lower prices, and the CFTC is trying to respond to these disruptors. Definitions should be clear, and some of them may be pushing the envelope right now.”

—With reporting by Tyler Bailey