Arthur Hayes 'flattered' as Coinbase backs US stock perpetuals

The US Securities and Exchange Commission has waded into the legal fight over stock perpetual swap contracts, filing a proposed court brief on Monday that opposes a bid to temporarily halt trading in the products while the agency reviews how exchanges listed them.

The brief, reported on Monday, leaves the central questions open. It does not say whether the SEC will set aside the exchanges' listing rules, nor whether the contracts qualify as security futures or security-based swaps — the stricter of the two classifications, which would face tighter restrictions on retail trading. The distinction matters because security-based swaps carry heavier compliance burdens and could effectively push retail traders out of the market.

The lawsuit comes from the Capital Markets Alliance Association (CMAA), which argues the contracts should be treated as security-based swaps. Arthur Hayes, who was CEO of BitMEX when that exchange launched the original Bitcoin perpetual swap, said he was "flattered" by Coinbase's move into stock perpetuals. BitMEX's product, which allowed leveraged bets on Bitcoin with no fixed expiration date, made perpetual swaps a staple of crypto trading.

What does the case actually turn on?

Stock perpetuals let traders speculate on individual share prices without owning the underlying stocks. Unlike traditional futures, they never expire. That structural quirk is now the legal battleground.

In a Tuesday court filing, CMAA argued the Commodity Futures Trading Commission approved the contracts without adequately explaining its decision or addressing unresolved regulatory questions.

US District Judge Valerie Caproni has already shaped the trajectory. On Nov. 3, she denied the alliance's request for a temporary restraining order, finding the group had not yet shown likely irreparable harm. But she also found the alliance was likely to succeed on its claim that the CFTC exceeded its authority — an early signal that the case has legs.

CMAA leaned on market data to argue urgency. The group cited roughly $375 million in reported 24-hour notional trading volume for Kalshi's stock perpetuals shortly after launch, claiming the products were already diverting business from traditional stock markets.

Is a perpetual really a future?

Wojciech Kaszycki, strategy adviser to BTCS SA, told Cointelegraph that the absence of a fixed expiration or delivery date complicates treating perpetual contracts as futures. He pointed to the "sale for future delivery" framing that anchors futures regulation — a framing that a product with no delivery date strains to satisfy.

Kaszycki also flagged the practical consequence of a ruling against the CFTC: trading activity would likely migrate toward offshore and decentralized platforms rather than disappear.

"The product doesn't die; it just changes address," he said.

That dynamic is familiar from crypto markets. Perpetual swaps flourished offshore for years before US-regulated venues moved to offer similar exposure. A court decision tightening domestic rules could reroute volume rather than shrink it, shifting activity to venues beyond US jurisdiction.

For exchanges like Coinbase and Kalshi, the stakes are operational as much as legal. A reclassification as security-based swaps would demand new compliance infrastructure, potential retail restrictions and possibly delisting. A ruling upholding the CFTC's approval would cement a new product category at the intersection of equities and derivatives — one that traditional exchanges view as a direct competitive threat.

The SEC's proposed brief buys the agency time. It signals an interagency tug-of-war over jurisdiction while stopping short of a firm position on classification. Judge Caproni's finding that CMAA is likely to succeed on its core claim against the CFTC suggests the exchanges should prepare for a substantive ruling, not a quick dismissal. The next decision point comes as the court weighs the preliminary injunction request and the SEC completes its review of the listing rules.