Key Takeaways
- • Coinbase, Kraken and Kalshi have backed the CFTC in a dispute over single-stock perpetual futures, joining Paradigm, DRW Holdings and Jump Trading, according to CoinDesk.
- • The Capital Markets Alliance, backed by Citadel Securities and Cboe, sued seeking emergency restrictions, arguing stock-linked perpetual contracts are security-based swaps under SEC jurisdiction.
- • Crypto firms counter in an amicus brief filed in the US District Court for the Southern District of New York that these instruments are security futures, not security-based swaps.
- • A separate CME Group lawsuit argues crypto perpetual futures should be classified as swaps, and the CFTC has requested dismissal of that case.
- • A federal judge initially allowed trading to continue in the stock-perpetuals dispute, while the jurisdictional question remains unresolved.
Summary
Major cryptocurrency firms, including Coinbase, Kraken and Kalshi, are supporting the US Commodity Futures Trading Commission (CFTC) in two legal disputes over perpetual futures, according to CoinDesk. The cases could reshape how cryptocurrency and stock-linked derivatives are regulated in the United States. Other industry participants backing the CFTC in the single-stock perpetual futures dispute include Paradigm, DRW Holdings and Jump Trading.
The central dispute involves a lawsuit filed by the Capital Markets Alliance, which is backed by Citadel Securities, Cboe and other financial firms. The alliance seeks emergency restrictions on these contracts, which allow traders to speculate on asset prices without fixed expiration dates. It argues that stock-linked perpetual contracts qualify as security-based swaps, which would place them under Securities and Exchange Commission (SEC) jurisdiction rather than the exclusive oversight of the CFTC. Crypto firms disagree and maintain that the instruments should be classified as security futures.
In an amicus brief filed in the US District Court for the Southern District of New York, cryptocurrency companies argued that traditional financial institutions could offer competing perpetual products rather than seeking to block them. The filing stated that established firms "could offer that better product themselves; instead, CMAA sued and sought emergency relief to keep it off the market." The companies further asserted that "the question, then, is not whether equity perpetuals resemble security-based swaps, but whether they are security futures and they are." They also maintained that both the CFTC and SEC had participated in establishing the regulatory treatment of these instruments.
A separate lawsuit involving CME Group challenges the CFTC's treatment of cryptocurrency perpetual futures. CME contends these contracts should be classified as swaps rather than futures, which would impose different regulatory requirements, although the CFTC would retain jurisdiction. According to CoinDesk, the regulator has requested dismissal of CME's lawsuit, and that proceeding remains unresolved.
In the stock-perpetuals dispute, a federal judge initially permitted trading to continue but indicated the jurisdictional challenge warranted consideration. The article notes that under the Trump administration, regulators have sought to bring offshore perpetual futures activity into regulated US markets. The outcomes could determine which agencies supervise these products and influence competition between crypto platforms and established financial exchanges.
The central dispute involves a lawsuit filed by the Capital Markets Alliance, which is backed by Citadel Securities, Cboe and other financial firms. The alliance seeks emergency restrictions on these contracts, which allow traders to speculate on asset prices without fixed expiration dates. It argues that stock-linked perpetual contracts qualify as security-based swaps, which would place them under Securities and Exchange Commission (SEC) jurisdiction rather than the exclusive oversight of the CFTC. Crypto firms disagree and maintain that the instruments should be classified as security futures.
In an amicus brief filed in the US District Court for the Southern District of New York, cryptocurrency companies argued that traditional financial institutions could offer competing perpetual products rather than seeking to block them. The filing stated that established firms "could offer that better product themselves; instead, CMAA sued and sought emergency relief to keep it off the market." The companies further asserted that "the question, then, is not whether equity perpetuals resemble security-based swaps, but whether they are security futures and they are." They also maintained that both the CFTC and SEC had participated in establishing the regulatory treatment of these instruments.
A separate lawsuit involving CME Group challenges the CFTC's treatment of cryptocurrency perpetual futures. CME contends these contracts should be classified as swaps rather than futures, which would impose different regulatory requirements, although the CFTC would retain jurisdiction. According to CoinDesk, the regulator has requested dismissal of CME's lawsuit, and that proceeding remains unresolved.
In the stock-perpetuals dispute, a federal judge initially permitted trading to continue but indicated the jurisdictional challenge warranted consideration. The article notes that under the Trump administration, regulators have sought to bring offshore perpetual futures activity into regulated US markets. The outcomes could determine which agencies supervise these products and influence competition between crypto platforms and established financial exchanges.
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