The Future of Crypto Trading: Understanding Perpetual Futures and Regulatory Changes

Derivatives trading involve contracts that allow traders to speculate on price movements, hedge risk, or gain exposure to digital assets without directly owning them.

Now crypto perpetual futures are a type of financial derivative, and these futures have faced a complex as well as evolving legal landscape in the US, but the CFTC is actively reconsidering its prior restrictions and has begun the process of reviewing and approving. for US exchanges.

Meanwhile, the Clarity Act, which passed a House vote yesterday, could help lead to greater adoption of these contracts.

Joining me live here at the New York Stock Exchange is Antonio Giuliano, CEO and founder of DYDX.

Antonio, thank you so much for joining me today.

Thank you for having me.

Well, it's been a big week for crypto, but we've also been reading about crypto futures.

So explain to the layperson how this actually works.

Yeah, absolutely.

So derivatives have always been a really big part of the crypto market, especially in the past few years.

About 75% of all trading volume in crypto happens in derivatives, and as you were mentioning, perpetual contracts are the most popular type of derivative in crypto.

Now currently they're not able to be traded in the US, and that's just starting to change, which is something that we're very excited about.

Yes, and speaking of the US, all eyes have been glued to the nation's capital this week, and we've been anticipating the passage of several bills.

So what does yesterday mean in terms of the crypto landscape here in the US?

Yeah, well, it's been something that's been building for a little while now with the new administration, but we are very excited about it.

It's been really challenging to compete in the broader crypto market as a US company for A little while now, and I think that's just starting to change and perhaps it will even become an advantage to be based in the US.

DYDX is based right here in New York in the broader crypto landscape.

Crypto is a market that's really worldwide, and US companies have historically struggled to compete.

And so I think this is a really good step forward and something that's going to enable us just to focus on building the products that people want.

Yeah, and I'm in that.

And you have plenty of conversations with your stakeholders as well.

So what type of clarity are you looking for in particular?

So for us in particular, just because DYDX is really focused on building a pro trading experience within DFI or decentralized finance, the thing we're most focused on is the regulation of derivative contracts for crypto.

And so you touched on the CFTC, that's probably the main regulator that Look at for these derivative contracts thinking about can these contracts be traded in the US, what risk parameters need to be associated with them to make them safe.

But one of the really cool things about DeFI is it does a lot of the things that regulation is designed to do automatically.

It's like you can just look at the blockchain to make sure all the funds are where they say they are, and it's just a much safer way to trade overall.

It's just more that regulation has Caught up to that and it's just starting to, which is something we've been pushing for a little while now alongside other companies in Defi and I think again will give us a lot of freedom moving forward to build the products that people want.

And speaking about products that people want, when we zoom out and look across the Atlantic or look across the Pacific, tell us about the gaps that you're seeing when it comes to regulation and innovation as a result of this.

Yeah, so we feel pretty good right now about where we're at from a regulatory perspective.

Definitely we'd like to be able to operate in the US, but outside of that, cryptos are really worldwide markets, and DYDX already operates pretty much worldwide.

So right now the main products that DYDX offers is the perpetual feature, which again is the most popular type of derivative contract.

Within crypto, one of the things that we're just announcing today actually is DYDX has just done its first acquisition in a company named Pocket Protector.

Now Pocket Protector offers spot trading and more social enable features for trading.

And so this is a really exciting beginning to the expansion of the DYDX product suite.

And this is something you're seeing across a lot of different crypto platforms is just really starting to verticalize what crypto trading means, and each crypto trading platform is starting to have derivatives and spot trading all wrapped up in a really nice user interface, and that's really what we're building towards at DYDX as well.

Yeah, and it's interesting you mention spot trading because there might be viewers out there who are watching right now and they're thinking about getting into crypto, but they haven't yet.

And given a lot of the expectations here. about what could be coming down the pike.

What would your advice be to these so-called later adopters of crypto?

Yeah, I would mostly advise to start slow and if you're just dipping your feet in the water, probably start with like a Bitcoin, Ethereum, a Salana, your major assets.

See how that feels.

Crypto is obviously a really volatile industry, so don't invest more money than you can afford to lose.

But that being said, there's quite a lot of really interesting things happening in crypto right now.

One of the Cool things that I've been really excited about in crypto for a long time it's just a really exponential increase in the number of assets that are traded within crypto.

It's like back in 2020 there were tens of thousands and fast forward to today there are millions of them, like hundreds of thousands of assets being listed every single day.

And so what it even means to be an asset is kind of being tested within crypto.

Like we're sitting here in the New York Stock Exchange, right very old world stocks, commodities, etc. and those things certainly are starting to exist in crypto.

So, and that's really exciting, but the other part of crypto is really kind of the wild west, and it's really individual people thinking about what should be valued, what should be traded, and I'm really excited to see where that takes us going into the future.

Yeah, and speaking of which, we're fast approaching the opening bell, so we have about 60 seconds here, but indeed we are here at this historical building.

So in terms of products that might be coming down the pike for retail investors out there, what are you paying attention to?

So I think the biggest thing in crypto continues to be trading, as I was mentioning, the DYDX has really focused on pro trading within crypto.

Now we're starting to expand into more retail types of trading products with spot, with social enabled features, and that's something I'm really excited about.

There will continue to be a lot of innovation within crypto like I was saying in terms of what can be traded, but whatever is tradable within crypto, we want it to be tradable on DYDX.

OK, Antonia, well, great to have you here at the New York Stock Exchange, and thank you so much for offering your insights and your perspective.

Thanks for having me.