DRW’s Don Wilson tells regulators perpetual futures risk is a design choice, not a flaw
DRW founder Don Wilson says leverage and auto-deleveraging are exchange choices, arguing real-time settlement could reshape how perps are regulated.
Don Wilson, founder and chief executive of proprietary trading firm DRW, has publicly challenged the regulatory framing of perpetual futures, arguing that policymakers are conflating the instrument itself with the risk parameters that individual exchanges choose to attach to it. In a series of posts on X on 28 July, Wilson set out a case that rule-writers examining crypto derivatives are working from a flawed premise.
His central claim is straightforward: a perpetual future is simply a futures contract without an expiry date. Features that draw the most regulatory scrutiny — leverage of up to 100 times, and auto-deleveraging mechanisms that forcibly cut profitable positions when an exchange’s insurance fund is depleted — are, in his view, design decisions made by specific trading venues such as Binance or Bybit, not structural properties of the perpetual contract itself.
Separating the instrument from the exchange
Wilson described auto-deleveraging as an unnecessary “band-aid” adopted by particular platforms rather than a requirement for perpetuals to function properly. He argued that, stripped of these exchange-specific overlays, perpetual futures offer genuine efficiency gains over dated contracts: lower transaction costs, reduced market impact, and closer tracking of the futures curve, since traders avoid the fees and slippage associated with rolling a March contract into June.
The distinction matters for how regulators calibrate rules. If leverage limits and deleveraging mechanics are treated as inseparable from perpetual futures as an asset class, oversight risks becoming blunt — restricting a useful contract format because of choices made by a subset of exchanges, rather than addressing those choices directly.
Real-time settlement and the margin question
Wilson also pointed to blockchain-based settlement rails as a factor regulators have underweighted. Traditional futures markets typically recalculate margin once or twice daily, leaving exposure to sharp intraday moves that occur between settlement windows — a recognised source of systemic risk in conventional derivatives markets.
Real-time settlement, he argued, allows margin requirements to be adjusted continuously rather than at fixed intervals, meaning collateral can respond to adverse price moves as they happen. Wilson suggested this could ultimately lower initial margin requirements, since systems would no longer need to build in a buffer against overnight gaps that never materialise under continuous recalculation.
A voice with regulatory history
DRW is among the largest proprietary trading firms globally, with a long-standing footprint in traditional derivatives markets, and Wilson has previously been in legal disputes with the US Commodity Futures Trading Commission. That history lends his intervention weight beyond typical crypto-industry commentary directed at regulators.
Wilson is pushing for broader use of perpetual-style contracts beyond crypto, extending into commodities and securities markets. He is not isolated in that ambition: prediction market operator Kalshi has proposed expanding into precious metals perpetual futures, an indication that regulated demand for the format is spreading well beyond digital assets.
For UK and European regulators still shaping their approach to crypto derivatives under frameworks such as MiCA, the argument sharpens a live policy question: whether rules should target the contract structure itself or the specific risk controls — leverage caps, liquidation mechanics, margining cadence — that individual venues choose to implement around it.
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