Coinbase, Kalshi, Kraken Parent Back CFTC in Stock Perpetuals Suit
Coinbase, Kalshi, Kraken parent Payward and three trading firms asked a federal court to accept a brief defending the CFTC's authority over single-stock perpetual futures. The filing responds to a lawsuit by the Capital Markets Alliance Association, which argues the products fall under SEC jurisdiction.
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The Amicus Filing
Coinbase, Kalshi, Payward and three trading firms asked the U.S. District Court for the Southern District of New York to accept an amicus brief supporting the Commodity Futures Trading Commission's authority to regulate perpetual futures tied to individual U.S. stocks, according to a November 9 court filing. The other signatories are DRW Holdings, Jump Trading and Paradigm Operations, which described themselves as market participants with existing or potential interests in equity perpetual trading.
The brief is filed in Capital Markets Alliance Association v. Commodity Futures Trading Commission, No. 1:26-cv-09608-LGS. The case concerns applications from Coinbase Derivatives, KalshiEX and Bitnomial Exchange to list perpetual contracts on large-cap U.S. stocks. The exchanges filed on September 18, and the applications were deemed approved on November 2 under the regulator's product review process. Payward owns Kraken and acquired Bitnomial earlier this year.
The Core Legal Question
The dispute turns on whether single-stock perpetual contracts qualify as security futures, which fall under joint CFTC and SEC oversight, or as security-based swaps, which fall under the SEC alone. The filing argues the Commodity Exchange Act lets perpetual contracts sit within the existing security futures framework even without a fixed expiration date. "A security future—by definition—cannot be a swap," the firms wrote.
The firms say the relevant test is whether equity perpetuals meet the statutory definition of security futures, not whether their structure resembles other derivatives. Coinbase general counsel Molly Abraham made a similar argument on November 10, saying Congress set up the security futures framework through legislation enacted in 2000.
The Plaintiff's Position
The Capital Markets Alliance filed suit on November 2. Its members include Cboe and Citadel Securities. The association contends contracts without expiration dates should be treated as security-based swaps under SEC jurisdiction. Its complaint says the CFTC exceeded its authority, failed to adequately explain its decision, and did not consider consequences for securities markets. Adam Ford, the association's secretary, said products launched outside established regulatory requirements could weaken investor protections and market oversight. The plaintiff asks the court to vacate the approvals and bar the CFTC from giving them effect while the case proceeds.
Structure and Next Steps
The supporting firms argue perpetual futures share key features of traditional futures, including standardized terms, margin requirements and centralized clearing. The main difference is the absence of a scheduled expiration. Funding payments keep the contract price tied to the referenced stock, and traders can close positions at any time. The industry filing follows a November 3 ruling from U.S. District Judge Vale, the remainder of which was not included in the source material available for this report. The court's decision on whether to accept the amicus brief, and the outcome of the underlying challenge, remain pending.
Why It Matters
For Traders
Single-stock perpetual listings on U.S. venues depend on how this challenge resolves, so open positions or planned entries should account for possible court-ordered changes to approvals.
For Investors
The outcome will set whether U.S. equity perpetuals sit under CFTC or SEC oversight, a jurisdictional question that will shape the regulatory path for tokenized stock derivatives.
For Builders
Teams building stock-linked perpetual products should map which regulator governs their contract design, since a ruling could force changes to margin, clearing or listing requirements.
This article is for information only and is not financial advice. Read the full disclaimer.
