American derivatives markets began with agriculture. Futures trading grew out of the grain trade in the 1800s, when the exchanges of the Midwest gave farmers and merchants a place to discover prices and manage risks by trading contracts that set a price today for a crop delivered months later. Derivatives regulation began as farm policy: starting in 1922, federal oversight of futures markets sat inside the U.S. Department of Agriculture for five decades. When Congress created the CFTC in 1974, it tasked the House and Senate Agriculture Committees with oversight of the new agency, a role they maintain to this day.

HPC advocates for regulations that allow Americans to access onchain markets, including those for perpetual futures. Our goal is to ensure that end users in the U.S. derivatives markets can benefit from innovative technologies and novel products such as these. Our work starts with knowing who the markets were built to serve: the agricultural producers and processors who have relied on them longer than anyone. The agricultural community is and has always been a core CFTC constituency, and its input shapes how our derivatives markets evolve, even for products that never touch a farm commodity. Perpetual futures are no exception.

On July 29, the CFTC’s Agricultural Advisory Committee convened for the first time in more than two years. Chairman Selig opened the meeting by recalling the Committee’s founding in 1985, when exchanges had just begun listing agricultural options following a half-century prohibition, and regulators were confronting novel products that blurred familiar categories. Perpetual futures are the novel product of this era, and the Committee’s discussion of product choice, risk management gaps, and market modernization reflects the important questions that the Commission is working through today.

Today we filed a statement in connection with the meeting, which we attended in person. Our statement makes three points:

1. Agricultural end users manage risk best in a market that offers them choice, and the options prohibition shows the cost of foreclosing it without careful consideration.

2. The Commission’s phased approach to perpetual futures is the right one, and end-user demand should drive the adoption of novel derivative types.

3. Public blockchains can help modernize clearing and settlement infrastructure, while improving collateral mobility and preserving the market integrity protections of the Commodity Exchange Act.

HPC is glad to support the Committee’s work with research and education, and to serve as a resource to its members and the market end users they represent. We are a new institution in one of the oldest corners of American finance, and good policy has always been built around the communities our derivatives markets exist to serve. We look forward to working collaboratively with stakeholders in the agricultural community, because getting perpetual futures right for America starts with the people who know these markets best.

Read our full statement here.