Crypto Perpetual Futures Trading

I understand that futures contracts are generally prohibited, but how about perpetual futures, typically seen in crypto? It solves some of the issues. Because it’s perpetual, there is no worry about the delivery date and the contract expiry; rather, it’s continuous, which does not create a large gap between the underlying asset’s price (a very negligible difference usually). The perpetual futures are also different from the options (most explanations I see of prohibition are usually about options and the strike price). It has potential gharrar and maysar, but it would also be negligible with risk management and a trading thesis. Unlike margin trading, the borrowed amount on leverage, there is no interest charged immediately as some do or after an hour/day; rather, the maintenance margin is collateral, so no repayment and no riba is being charged. The charged fee can consider the fees in exchange for using the platform and the transactions, plus there are also negative fees. There is usually no liquidity issue either because those coins with such less liquidity don’t even have futures. I guess the issue is technically owning the asset, as on perpetual futures contract cannot be taken possession of like something on the spot. But why cant the contract be considered a separate entity? And thus, contracts are being traded, where it can be called just as spot, but we are trading contracts. Similar to apartment buildings in the air that are not constructed yet but can still be bought based on a contract. It’s like the first story is the spot; the second story in the air is a future. Lastly, in practice, the future trade is settled just like a spot trade; they almost don’t seem different in the application of taking a trade. Allahu alam, may allah guide us

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@Mufti_Billal @Mufti_Faraz_Adam

I doubt you will get an answer to this, I have posted similar question and it never really got a traction from the Mufti. Here is that post!

Did you get an answer on any other platform? I’ve posted on many platforms, but no answers.

Rakaan from Practical Islamic Finance shared this thoughts on the topic…Are Perpetual Futures Haram?

He raised the point of cash settlement (which meets the definition of gambling, he says), but my question is that why it can’t be traded as a separate entity which is pegged to an asset?

As I understand, from Islamic perspective, the contract has to be based on the asset itself and not derivatives. This is where things get a little more complicated regarding Hedging and Risk Management and difference of permissibility emerge, and most tend to err on the side of caution.

…just Google:- Derivatives and/or Hedging in Islamic Finance; you will find a lot of interesting read.

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