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Coinbase, Kalshi Lead Six Firms Backing CFTC in Stock Perpetuals Case
Coinbase, Kalshi, Payward, DRW, Jump Trading and Paradigm told a federal court the Commodity Exchange Act classifies single-stock perpetuals as security futures, backing the CFTC's Nov. 3 approval.
Outputs
Six firms — Coinbase, Kalshi, Payward, DRW Holdings, Jump Trading, Paradigm — seek to file a brief backing the CFTC in the stock perpetuals case.
The CFTC announced single-stock perpetual contracts could trade on registered exchanges on Nov. 3.
The firms cite the Commodity Exchange Act and a securities-futures framework Congress passed in 2000.
Cboe has joined a lawsuit seeking to overturn the CFTC's approval.
Six trading and market-infrastructure firms asked a federal court for permission to file a brief supporting the Commodity Futures Trading Commission's authority over perpetual contracts tied to individual U.S. stocks. Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading and Paradigma — Paradigm — want the court to uphold the CFTC's approval of the contracts against a legal challenge.
The firms contend the Commodity Exchange Act, together with a securities-futures framework Congress established in 2000, classifies single-stock perpetuals as security futures rather than securities-based swaps. The distinction carries direct operational weight: security futures fall under CFTC jurisdiction on registered exchanges, while securities-based swaps sit with the Securities and Exchange Commission and carry a different compliance regime.
What does the classification change?
The dispute turns on a two-decade-old statutory boundary. Congress created the security-futures category in 2000 to cover futures on single securities and narrow-based security indexes, splitting oversight between the CFTC and the SEC. The six firms argue perpetual contracts on individual U.S. stocks — products without expiry dates that trade crypto-style margin — fit that existing category rather than the swap framework.
If the court agrees, the contracts can list on CFTC-registered exchanges under futures-market rules. If it sides with challengers, the products would need to satisfy the SEC's swap regime or halt U.S. listings. The firms also warn that blocking U.S. listings would not eliminate demand; it would push trading activity offshore, where U.S. regulators have no supervisory reach.
The filing's coalition is notable in itself. Coinbase and Kraken's parent Payward operate major crypto venues; Kalshi runs a CFTC-regulated exchange for event contracts; DRW Holdings and Jump Trading are two of the largest proprietary trading firms in U.S. derivatives markets; Paradigm is a crypto-focused venture firm. The group spans exchanges, liquidity providers and capital, indicating broad industry alignment on the jurisdictional question rather than a single operator's interest.
How did the case start?
The CFTC announced on Nov. 3 that single-stock perpetual contracts could begin trading on registered exchanges. That approval triggered litigation seeking to overturn the agency's decision. Cboe, one of the largest U.S. exchange operators, has joined the lawsuit against the CFTC's approval.
The six firms now seek amicus status to support the CFTC's position in that litigation. Their brief, if accepted, would give the court the industry's reading of the Commodity Exchange Act's text and the 2000 securities-futures framework as Congress wrote them.
The case sits at the intersection of two market structures that have historically stayed separate: traditional U.S. equity derivatives and perpetual contracts, a product type that originated in offshore crypto markets. The court's reading of the 2000 statute will determine whether that separation holds or whether listed futures venues can host equity-linked perpetuals under CFTC rules.
What happens next?
The court must first decide whether to accept the six firms' amicus brief, then rule on the underlying challenge to the CFTC's Nov. 3 approval. A ruling either way will define the listing pathway for single-stock perpetuals in the United States — and, if the challengers prevail, will likely redirect the product back toward offshore venues that U.S. regulators cannot supervise.
via tokenpost.com (Source)
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News editor covering technology and product news in crypto and web3 industry at Mempool Brief.
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