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Coinbase, Kalshi, and Payward have asked a federal court for permission to file an amicus brief defending the Commodity Futures Trading Commission’s authority to regulate single-stock perpetual futures in the United States, according to a Monday court filing, according to The Block.
More coverage is filed under Regulations.
Earlier reporting: Coinbase Wins OCC Approval for National Trust Bank Charter.
The move comes in response to a lawsuit filed last week by the Capital Markets Alliance (CMA), an industry association that includes Cboe and Citadel Securities among its members. The CMA is seeking to overturn the CFTC’s approval of the products, arguing that the regulatory agency overstepped its authority.
Legal Challenge to Regulatory Authority
DRW Holdings, Jump Trading, and Paradigm joined Coinbase, Kalshi, and Payward in requesting leave to file the brief supporting the CFTC. The core of the dispute centers on how equity perpetual futures, or perps, should be classified under U.S. law.
The CMA argues that because equity perps do not expire on a set date, they should not be treated as futures. Instead, the association contends they should be classified as “security-based swaps.” Under the CMA’s interpretation, security-based swaps cannot be listed on CFTC-regulated exchanges, which would effectively block the products from operating on the commission’s platforms.
The crypto firms rejected this characterization in their filing. They argued that the Securities and Exchange Commission (SEC) was “at the table from the very start” of the regulatory process. The filing noted that the CFTC and SEC jointly sought public comment on whether perpetual contracts should be classified as security futures, indicating a collaborative approach to the regulatory framework.
Applications Deemed Approved
According to the Monday filing, Coinbase, Kalshi, and Payward have submitted applications with the CFTC to list equity perps tied to U.S. stocks. These applications were deemed approved on Nov. 2. A court decision upholding these approvals would preserve the path for these firms to offer or expand the products onshore.
Perpetual futures are derivatives that allow traders to speculate on an asset’s price movements without holding the underlying asset. Unlike traditional futures contracts, perps have no expiration date, a feature that has drawn scrutiny from traditional financial institutions but remains popular in global crypto markets.
Industry Response to CMA Lawsuit
Molly Abraham, general counsel of Coinbase, addressed the legal distinction on X, stating that under the Commodity Exchange Act and the securities futures framework Congress established in 2000, security futures products are not swaps. Her comments reinforced the argument that the CFTC has the statutory authority to regulate these instruments.
Ryan VanGrack, Vice Chairman of Coinbase, emphasized the competitive landscape in a separate statement. He noted that global markets are already trading equity perps and argued that U.S. investors deserve access to these markets under the consumer protections and joint oversight provided by the CFTC and SEC.
“The U.S. should lead, not cede, this space,” VanGrack said. The outcome of the CMA lawsuit will determine whether the CFTC retains jurisdiction over single-stock perpetual futures or if the products are reclassified under SEC oversight.
Source: The Block
