Crypto firms back CFTC in legal fight over U.S. stock perpetual futures

Six companies, including Coinbase, Kalshi and Kraken parent Payward, have filed a proposed amicus brief supporting the Commodity Futures Trading Commission in litigation over perpetual futures tied to individual U.S. stocks.

The November 9 filing concerns a lawsuit brought by the Capital Markets Alliance Association. The dispute centers on whether the products fall within the legal definition of security futures or swaps under the U.S. regulatory framework.

The case remains unresolved. A federal judge previously found that the challengers were likely to succeed on their claim that the CFTC exceeded its statutory authority, but the court did not halt trading approvals.

The competing interpretations place the classification of equity perpetuals at the center of the case, with potentially important implications for the joint CFTC-SEC framework for security futures.

Firms argue equity perpetuals are security futures

The proposed brief was filed by Coinbase, Kalshi, Payward, DRW Holdings, Jump Trading and Paradigm Operations. The companies support the CFTC’s position in the litigation over stock-linked perpetual futures.

The amici argue that equity perpetuals should be classified as security futures rather than swaps. They also contend that a contract does not need a fixed expiration date to qualify as a security future.

That classification would keep the products eligible for trading under the joint CFTC-SEC framework identified in the filing. The brief represents the companies’ legal position, not a final determination by the court.

Court ruling left approvals in place

On November 3, a federal judge found that the challengers were likely to prevail on their argument that the CFTC had exceeded its authority. The court’s preliminary assessment indicated that the contracts appeared likely to qualify as swaps.

However, the court did not stop the relevant trading approvals. The result is that the approvals were not halted while the legal challenge continues.

The CFTC said on November 3 that equity perpetual futures could begin trading on U.S.-regulated exchanges. That statement and the pending lawsuit underscore the difference between the agency’s position and the court’s preliminary view.

Classification remains the central issue

The case turns on a statutory question: whether perpetual futures linked to individual U.S. stocks are security futures, as the amici contend, or swaps, as the court’s preliminary ruling suggested.

The brief seeks to support the CFTC’s defense of its approach, while the challengers continue to contest the agency’s authority. No final ruling on the classification has been established in the evidence available.

The dispute arrives as U.S. policy discussions continue to focus on the boundaries of market oversight, including proposed legislation affecting the broader crypto sector.

Continue reading: U.S. policy discussions affecting the crypto sector on BTCNews.

Continue reading: other recent regulatory developments affecting crypto businesses on BTCNews.

Sources

• U.S. District Court for the Southern District of New York filing: Brief for Amici Curiae Coinbase, Kalshi, Payward, DRW Holdings, Jump Trading and Paradigm Operations
• U.S. District Court for the Southern District of New York: Order on motion concerning equity perpetual futures
• Commodity Futures Trading Commission: CFTC Chairman Selig Releases Statement on Equity Perpetual Futures
• Cointelegraph: Coinbase, Kalshi join lawsuit backing CFTC over US stock perp futures

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