A perpetual contract is a futures contract with no expiry, held in line with spot by a funding rate. VARA caps retail leverage in Dubai at 5:1.
- A perpetual contract is a futures-style derivative with no expiry date, used mainly for leveraged crypto exposure.
- A funding rate paid between long and short holders keeps the contract price close to the spot price.
- VARA caps retail leverage at 5:1 in Dubai, which means a minimum initial margin of 20 per cent.
- Funding charges accumulate, so a position can be liquidated even when the underlying price has not moved.
How the Exchange Services Rulebook Brought Perpetuals Onshore
Perpetual contracts were, for years, an offshore product. That changed on 31 March 2026, when Dubai's Virtual Assets Regulatory Authority (VARA) published Part V of its Exchange Services Rulebook. The rulebook replaced an earlier pilot arrangement with a full regime for exchange-traded derivatives, covering futures, options, contracts for difference and perpetuals.
Any virtual asset service provider (VASP) wanting to offer these products now needs separate written authorisation. The funding rate mechanism, the margin model and the retail leverage cap all sit inside the rulebook rather than inside a platform's own terms of business.
Perpetual Contracts Explained in Plain English
A perpetual contract is a futures contract without an expiry date. The holder takes a long or short position on an asset, usually Bitcoin or another token, and profits or loses as the price moves. The position can stay open for as long as margin requirements are met.
Dated futures converge with the spot price naturally as expiry approaches. Perpetuals have no expiry, so they need another anchor. That anchor is the funding rate, a small payment exchanged between the two sides at regular intervals. When the contract trades above spot, longs pay shorts. When it trades below, shorts pay longs.
How Perpetual Contracts Work in the UAE
VARA sets out its treatment of these instruments in the Perpetual ETDs section of its rulebook. A Perpetual ETD is defined as any exchange-traded derivative with no fixed expiry. Providers must calculate the funding rate at least three times a day, use validated multi-source price feeds, and transfer funding between the paying and receiving clients on a regular daily basis.
Retail protection is tighter than most offshore venues. Leverage for retail investors is capped at 5:1, equal to a minimum initial margin of 20 per cent, and firms must set higher margin where that level is unsuitable. Qualified and institutional clients may access more, subject to the platform's own documented policy. Retail clients must also be given a predictive funding rate chart, with a disclaimer that it is educational rather than advice.
Elsewhere in the country the picture differs. The DFSA bars authorised firms from extending a credit facility to retail clients trading crypto tokens in the DIFC, while the FSRA regulates equivalent products in ADGM under its digital assets rules. Our guide to the eight CMA-licensed crypto activities sets out how the federal layer fits alongside these regimes.
Practical Example
Consider a Dubai resident with AED 20,000 of margin on a VARA-licensed exchange. At the 5:1 retail cap, that supports a long Bitcoin perpetual position of AED 100,000 notional. If the platform sets maintenance margin at 5 per cent, equity can fall to AED 5,000 before liquidation, which implies roughly a 15 per cent adverse move.
Now add funding. Suppose the rate runs at 0.03 per cent per interval with three intervals a day. The client pays AED 30 each time, or AED 90 a day, and around AED 2,700 over a month. Held long enough with a flat price, funding alone erodes equity towards the liquidation threshold. That is precisely the outcome the predictive funding chart is meant to make visible.
Common Misconceptions
The funding rate is often mistaken for interest. It is neither a loan cost nor a yield, but a transfer between traders that reflects the gap between contract and spot pricing. On the receiving side it looks like income, yet it can reverse direction at the next interval.
Liquidation is also confused with a margin call. On most perpetual platforms there is no call and no grace period. Once equity breaches maintenance margin, an automated risk engine closes the position. A third error is treating a perpetual as ownership. The holder has price exposure only, with no coins to transfer, stake or hold in custody.
People Also Asked
Are perpetual futures legal in Dubai?
Yes, on platforms authorised for them. VARA introduced a formal regime for exchange-traded derivatives in March 2026, and a licensed provider needs separate written approval before offering perpetuals. Offshore platforms without that approval sit outside the framework.
How often is the funding rate charged on a perpetual contract?
Most global platforms settle funding every eight hours, which works out at three payments a day. VARA requires the rate to be calculated at least three times daily, so a provider in Dubai cannot use a slower cycle.
What is the difference between a perpetual contract and buying the coin?
Buying spot gives you the asset itself, which you can hold, transfer or stake. A perpetual gives you leveraged exposure to its price only, with margin obligations, funding payments and the risk of automatic liquidation.
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