Coinbase, Kalshi Support CFTC in US Stock Perps Legal Fight
Coinbase, Kalshi and four other companies asked a federal court Monday to accept a brief backing the United States Commodity Futures Trading Commission (CFTC) in a lawsuit over perpetual futures tied to individual US stocks.
According to a proposed amicus brief shared Monday by Coinbase legal representative Molly Abraham, the group also includes Kraken parent Payward, trading companies DRW Holdings and Jump Trading, and crypto investment company Paradigm Operations. The companies argue that stock perpetual futures fall under existing US futures laws.
The filing comes days after a federal judge found that the CFTC likely “exceeded its statutory authority” in allowing single-stock perpetuals to trade as security futures.
The case could determine whether US exchanges can offer retail traders contracts that track individual stocks without expiring.
Why stock perps face scrutiny
On Nov. 3, the CFTC announced that single-stock perpetual futures, or stock perps, could begin trading on US-regulated exchanges for the first time.
The Capital Markets Alliance Association (CMAA), a newly formed trade and advocacy group representing traditional financial market participants and whose members include Cboe and Citadel Securities, sued the CFTC last week, challenging the CFTC’s authority to allow the contracts to trade.
Stock perps allow traders to speculate on the price movements of individual stocks without owning the shares. Unlike traditional futures, they have no fixed expiration date.
The CMAA argues that because the contracts lack a fixed expiration date, they should be regulated as security-based swaps, a type of derivative linked to stocks or other securities that is primarily overseen by the Securities and Exchange Commission (SEC) and faces tighter restrictions on retail trading.
The six companies backing the CFTC disagree, arguing that a fixed expiration date is not required for a contract to qualify as a security future, which falls under joint CFTC and SEC oversight.
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Judge questions CFTC authority but doesn’t halt trading
Following the CMAA’s complaint, US District Judge Valerie Caproni said the plaintiff was likely to succeed in its claim that the CFTC exceeded its statutory authority by allowing stock perps to trade as security futures.
Caproni found that the contracts appeared to qualify as swaps rather than security futures, casting doubt on the agency’s legal interpretation.
However, she denied CMAA’s request for a temporary restraining order, finding that the group had failed to demonstrate imminent, irreparable harm. The decision left the CFTC’s trading approvals in place while the lawsuit proceeds.
CMAA is scheduled to file its reply to the CFTC’s opposition to a preliminary injunction on Tuesday.
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