Petition Filed: Bringing Energy Perpetuals into the US Regulatory Fold

A joint letter submitted to the Commodity Futures Trading Commission is making waves by proposing a significant expansion of the US regulated derivatives landscape. Industry body HPC and a leading perpetual contracts market deployer are urging regulators to formally incorporate energy-based perpetual contracts—covering commodities like crude oil and natural gas—into the supervised market. The goal is to provide US market participants with a regulated tool for managing energy price risk around the clock, seven days a week.

A Real-World Case Highlights the “Time Gap” in Traditional Markets

The letter points to a compelling recent example: the outbreak of conflict in the Middle East in February 2026, which disrupted energy exports and global supply chains. This event coincided with a weekend closure of US futures markets. Consequently, many US entities with crude oil exposure found themselves without access to regulated hedging channels between Friday’s close and Sunday evening’s reopen.

In contrast, overseas participants during the same period managed their exposure using on-chain oil perpetual contracts. Data indicates that approximately two-thirds of the total price movement between Friday’s close and the benchmark’s Sunday reopen had already been priced on-chain beforehand. This underscores the unique value of 24/7 markets in responding to sudden geopolitical shocks.

Regulatory Exploration Meets Market Practice

US regulators are already examining novel derivative structures. In May of this year, the CFTC approved the first digital asset-based perpetual contracts to trade as futures on US exchanges. Following that, in June, the Commission issued a request for comment specifically focusing on perpetual contracts linked to physically deliverable commodities, soliciting input on contract design, reference prices, market integrity, and continuous trading.

Market practice appears to be advancing rapidly. According to operational data, since their launch in October 2025, markets for WTI crude, Brent crude, and Henry Hub natural gas deployed on a major on-chain platform have seen cumulative trading volume surpass $500 billion. Research notes that perpetual contracts, with no expiration or rollover needs, concentrate liquidity in a single order book, offering a structurally simpler product.

Serving Smaller-Scale Hedging Without Disrupting Traditional Pricing

Compared to traditional futures contracts, which often represent tens of thousands of dollars in notional value per contract, on-chain energy perpetuals demonstrate greater accessibility. For instance, the median trade size for crude oil contracts during weekend sessions is around $1,300, making them far more suitable for smaller entities or precise risk management needs.

Perhaps more importantly, research analysis suggests that in nearly 75% of sampled weekend periods, the price of crude oil perpetuals during the weekend was closer to the Sunday evening reopen price of the benchmark futures contract than that benchmark’s own Friday closing price. Statistical analysis found no evidence that this on-chain trading caused statistically significant harm to the reopen quality of CME WTI futures. This addresses some concerns about market fragmentation and price impact.

Five Proposals Outline a Path to Regulation

To facilitate the integration of energy perpetuals within the regulatory framework, the letter puts forward five concrete recommendations:

  • Principles-Based Assessment: Advocate for a technology-neutral, core principles-driven framework to evaluate energy perpetual contracts and 24/7 trading.
  • Clarify 24/7 Operation: Confirm that exchanges and clearinghouses can be permitted to operate 24/7 provided they meet core principles.
  • Redefine “Business Days”: Clarify how traditional rules involving “business days” and other time limits apply in continuously operating markets.
  • Expand Eligible Collateral: Recognize stablecoins and tokenized traditional collateral as eligible margin for clearing derivatives.
  • Allow On-Chain Infrastructure: Confirm that regulated markets can utilize on-chain infrastructure for execution, margining, clearing, settlement, and recordkeeping, provided core principles are met.

The letter concludes by emphasizing that introducing energy perpetual contracts does not require new legislation. The existing US Commodity Exchange Act and CFTC regulatory framework already possess the flexibility to accommodate such innovative products. The key lies in how regulators apply their existing authority to oversee and integrate them under pragmatic, principles-based guidance.