Picture a bet on Nvidia (NVDA) placed in the middle of a Sunday night, with leverage and no end date. Kalshi, the prediction-markets platform, plans to seek regulatory approval for contracts like that on single stocks, including Tesla (TSLA) and Apple (AAPL), according to people familiar with the matter. They’d be the first regulated ones in the U.S. Critics call bets like these risky and hard to understand. They’re also a very different thing from owning a stock.
How a perp works
The contracts are perpetual futures, or perps — bets on a price that never expire. They trade around the clock and let traders pile on leverage, which amplifies potential gains and losses. To keep a perp’s price aligned with the real stock, traders make payments called funding rates.
Kalshi plans around 60 of them, tied to popular exchange-traded funds and to companies worth at least $100 billion. Coinbase Global (COIN), the largest U.S. crypto exchange, has filed paperwork that could pave the way for its own.
The appetite is already there. Hyperliquid, a Singapore-based crypto exchange, isn’t supposed to be open to U.S. residents, but users find ways around that. Its single-stock perp volume, including leverage, has surged to $212 billion from $4 billion at the start of the year. For illustration, that’s 53 times the starting level.
A share versus a bet
Here’s the difference that matters. A share is a slice of a business: if the company grows its profits over years, owners can benefit. A perp is a bet on where the price goes, with funding payments along the way and leverage that cuts both ways.
Skeptics warn that leverage can intensify a downward spiral during market stress. Benjamin Schiffrin of Better Markets, a group that pushes for tighter financial regulation, compares single-stock perps to leveraged single-stock ETFs, which have triggered massive losses for individual investors. “I think there’s just the potential for huge losses, especially amongst individual investors,” he said.
Kalshi’s chief risk officer, Udesh Jha, counters that funding rates reduce the risk of downward spirals and that Kalshi’s leverage matches other traditional U.S. derivatives exchanges. Either way, they’ll need approval from both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Money with a job to do — a tuition bill, a mortgage, next year’s income — generally doesn’t belong in a bet like this. Not sure which dollars have jobs? Sort them in a fifteen-minute review with your statement, and pack the umbrella before the clouds roll in.