Arthur Hayes 'Flattered' as Coinbase Defends Stock Perpetuals in Court

Arthur Hayes, co-founder of BitMEX, said he was "flattered" by Coinbase's courtroom defense of US stock perpetual futures, nearly a decade after his exchange launched the perpetual swap that reshaped crypto trading.

"When we launched the perpetual swap at BitMEX in 2016, Washington's reaction was less than warm," Hayes told Cointelegraph. "Ten years later, Coinbase is in federal court defending the right to offer them on US stocks. I'm flattered. Imitation is the sincerest form of regulation."

Coinbase and five other companies filed an amicus brief on Monday supporting the Commodity Futures Trading Commission (CFTC) in a legal dispute over perpetual futures tied to individual stocks. The court accepted the brief on Tuesday.

Who is suing over stock perpetuals?

The Capital Markets Alliance Association (CMAA) brought the lawsuit and argues the contracts should be classified as security-based swaps, a category that faces tighter restrictions on retail trading. In a Tuesday court filing, the group said the CFTC had approved the contracts without adequately explaining its decision or addressing unresolved regulatory questions.

The CMAA also cited roughly $375 million in reported 24-hour notional trading volume for Kalshi's stock perpetuals shortly after launch, claiming the products already divert business from traditional stock markets.

Stock perpetuals let traders speculate on individual share prices without owning the underlying shares. Unlike traditional futures, the contracts carry no fixed expiration date — the feature at the center of the legal dispute.

What has the court decided so far?

On Nov. 3, US District Judge Valerie Caproni denied the group's request for a temporary restraining order, ruling it had not yet shown likely irreparable harm. She did find the alliance was likely to succeed on its claim that the CFTC exceeded its authority.

The US Securities and Exchange Commission (SEC) reportedly submitted a proposed court brief on Monday opposing the alliance's request to temporarily halt trading in the contracts. The agency said it was reviewing the exchanges' listing rules but left open whether it would set those rules aside and whether the contracts qualify as security futures or security-based swaps.

Why does contract structure matter?

Wojciech Kaszycki, strategy adviser to BTCS SA, said the absence of a fixed expiration or delivery date complicates the argument for treating perpetual contracts as futures, which hinge on the concept of a "sale for future delivery." He warned that a ruling against the CFTC could push trading activity toward offshore and decentralized platforms.

"The product doesn't die; it just changes address," Kaszycki told Cointelegraph.

Hayes was CEO of BitMEX when the exchange launched its Bitcoin perpetual swap in 2016, allowing traders to take leveraged positions on Bitcoin without a fixed expiration date. The product made perpetual swaps a staple of crypto trading venues worldwide.

The litigation now hinges on how Judge Caproni weighs the CFTC's approval process against the SEC's unresolved classification questions, with the outcome set to determine whether US-listed stock perpetuals remain on regulated exchanges or migrate offshore.