Last week, Cboe Global Markets quietly dismantled a narrative that has been quietly shaping crypto derivatives regulation: the equivalence between perpetual futures and zero-days-to-expiry (0DTE) options. In a statement that barely rippled through the usual crypto news cycles, the exchange argued that the two instruments are not the same, and that regulators should not treat them as such. It’s a rare moment of clarity from a traditional finance heavyweight, and one that deserves far more than a headline summary.
Let me be clear: as someone who has spent years auditing crypto derivatives protocols and designing governance frameworks for decentralised exchanges, I’ve seen this myth up close. The argument that “perpetual futures are just crypto’s version of 0DTE options” has been used by both sides—by regulators seeking to clamp down on high-leverage products, and by crypto proponents trying to borrow legitimacy from the most explosive product in TradFi. But equivalence is a dangerous shortcut. Code is law, but people are the soul. And in this case, the code of perpetuals and the code of 0DTE options encode fundamentally different risk profiles, settlement mechanics, and incentive structures. Treating them the same would be a regulatory error with long-term consequences for both markets.
Context: The Two Instruments in Question
Perpetual futures, first popularised by BitMEX in 2016, are derivative contracts that have no expiration date. Traders can hold positions indefinitely, paying or receiving a funding rate that keeps the contract price anchored to the spot price. They are cash-settled, margin-based, and typically traded on centralised or decentralised crypto exchanges. Their risk lies in the cumulative effect of funding payments, liquidation cascades, and the absence of a natural expiry to reset leverage.
Zero-days-to-expiry options are exactly what they sound like: options contracts that expire on the same day they are traded. They gained massive traction in traditional equity markets in 2023–2024, especially on indices like the S&P 500. Their defining feature is extreme time decay—theta eats away at their value within hours—and they offer leveraged, non-linear payoffs that can be used for hedging or speculation. They are cleared through central counterparties, with margin requirements that vary by day and volatility.
On the surface, both are short-duration, high-leverage instruments. But the similarity ends there.
Core: A Technical Dissection of the Differences
From my work auditing the risk engines of several top-tier perpetual swap platforms, I can tell you that the core mechanism of a perpetual is the funding rate. It’s a periodic payment between long and short positions that corrects the deviation between the perpetual price and the spot index. This creates a self-stabilising feedback loop—but it also introduces a variable cost that can spike during volatile periods. In a 0DTE option, there is no funding rate. The cost is the premium, which decays predictably (though non-linearly) toward zero at expiration. The risk of a perpetual is not that it expires worthless; it’s that you get liquidated before the funding rate reverts. The risk of a 0DTE is that the option expires out of the money.
Second, consider the settlement mechanism. Perpetuals settle continuously—margin is marked to market in real time, and positions can be closed at any moment. 0DTE options settle only at expiration (unless exercised early, which is rare for European-style options). This means that the risk of a flash crash or a liquidity gap is fundamentally different. In a perpetual, you can be forced out of your position mid-move; in a 0DTE, you hold until expiry, but you can also sell the option to close.
Third, the leverage profile. Perpetuals offer fixed leverage (e.g., 10x, 50x, 100x) that is applied to the entire position. 0DTE options offer embedded leverage through the option’s delta, which changes as the underlying moves. A 0DTE call that is deep out-of-the-money might have a delta of 0.05, giving 20x nominal leverage, but that leverage is non-linear and disappears as the option moves in-the-money. The risk management for these two instruments requires entirely different models.
Cboe’s statement, though brief, correctly identifies that applying the same regulatory framework—say, position limits, margin requirements, or reporting standards—to both would be a category error. It’s like regulating a bicycle and a motorcycle under the same rules because both have two wheels.
Contrarian: The Self-Serving Angle and the Hidden Agenda
But let’s be honest about the motives. Cboe is a dominant player in the traditional 0DTE options market. Its own products—SPX 0DTE options—have been a massive revenue driver. By arguing that perpetuals are fundamentally different, Cboe is protecting its own turf. If regulators were to lump all short-duration leveraged products together, they might impose stricter rules on 0DTE options as well, hurting Cboe’s business. So the distinction is not purely altruistic; it’s a strategic positioning move.
Moreover, I suspect Cboe is quietly preparing to enter the crypto perpetual market itself. The exchange has already filed for Bitcoin and Ether ETFs. Offering regulated perpetual futures would be a natural next step. By publicly calling for differentiated regulation, Cboe is laying the groundwork: “We are not the same as those unregulated crypto perpetuals, but we can offer a compliant version.” This is a classic case of regulatory arbitrage through narrative control.
Yet, even with that self-interest in mind, the technical argument stands. The myth of equivalence is indeed a myth. And as someone who has seen the consequences of oversimplified regulation in crypto—the way DeFi protocols were forced to comply with securities laws designed for penny stocks—I welcome any attempt to inject nuance. Don’t govern the exit, govern the entrance. Focus on the mechanism, not the label.
Takeaway: What This Means for Crypto
If U.S. regulators—particularly the CFTC and SEC—heed Cboe’s distinction, the path forward for crypto perpetuals becomes more viable. They could be classified as a separate asset class under the CFTC’s jurisdiction, with bespoke rules that acknowledge the funding rate mechanism and the continuous settlement model. This would reduce the risk of a blanket ban or overly restrictive position limits that would crush liquidity.
But the crypto community must also do its part. We need to stop borrowing the language of TradFi to make ourselves seem legitimate. Perpetuals are not just “crypto 0DTEs”. They are a new instrument with unique risks and benefits. Calling them something else doesn’t make them safer; it obscures the responsibility to design proper risk management. As I often say, listen more than you code—but in this case, we also need to explain more than we hype.
Ultimately, the question is not whether perpetuals and 0DTE options are different. They are. The question is whether regulators will have the sophistication to see that difference, and whether the crypto industry can provide the transparency and data to back it up. Based on the current trajectory, I’m cautiously optimistic. But I’ve been in this space long enough to know that a single exchange’s statement, however technically sound, is just the first step. The real work lies in translating that distinction into enforceable rules that protect users without stifling innovation. Code is law, but people are the soul—and it’s up to us to make sure the law matches the code.
