TLDR
- Coinbase, Kalshi, and four other firms sought court permission to defend the CFTC on November 9.
- A federal judge rejected emergency relief but questioned the CFTC’s authority over single-stock perpetual futures.
- The Capital Markets Alliance argues that the contracts fall under the SEC’s jurisdiction.
- The six firms maintain that federal law permits joint SEC-CFTC oversight of equity perpetuals.
- Coinbase Derivatives, KalshiEX and Bitnomial received deemed approvals on November 2 through regulatory inaction.
Coinbase, Kalshi and four other firms are contesting early judicial skepticism over single-stock perpetual futures. Their November 9 proposed brief backs Commodity Futures Trading Commission (CFTC) jurisdiction after a federal judge questioned that authority.
Payward, DRW Holdings, Jump Trading and Paradigm joined the two companies in the filing. The six firms seek permission to submit arguments supporting the CFTC. They maintain that equity perpetuals qualify as security futures, not security-based swaps.
Court Questions CFTC Authority but Denies Emergency Block
On November 3, Judge Valerie Caproni denied the alliance’s request for a temporary restraining order. However, she found the association likely to succeed on its central jurisdictional claim. She reasoned that contracts without future delivery might not satisfy the statutory definition of security futures.
The judge rejected emergency relief because the association had not demonstrated likely irreparable harm. Her ruling did not decide the lawsuit’s final merits. The association continues seeking a preliminary injunction against the approvals.
The alliance argues that equity perpetuals belong under the Securities and Exchange Commission’s exclusive authority. Its lawsuit alleges that the CFTC failed to explain its approvals or adequately assess investor risks.
Industry Brief Cites Joint Oversight and Existing Listings
The companies counter that Congress established joint SEC-CFTC oversight of security futures in 2000. Their brief argues that futures contracts need not have fixed expiration dates. It cites earlier federal decisions recognizing futures contracts of indefinite duration.
They also challenge claims that the SEC was excluded from the process. Both agencies requested public comments, while exchanges submitted listing standards to the SEC. The companies say these steps support the products’ treatment under existing securities futures rules.
Coinbase Derivatives, KalshiEX and Bitnomial submitted applications in September. Regulatory inaction resulted in deemed approvals on November 2, according to the filing. Payward owns Bitnomial, while DRW, Jump and Paradigm have trading interests in the market.
The legal challenge now concerns products already entering U.S. markets. Kalshi announced single-stock perpetual trading on November 5, referencing more than 50 companies. CFTC records separately list approved Kalshi contracts linked to Tesla and Nvidia. The regulator also lists Coinbase-linked equity perpetual contracts certified on November 5. Certification does not establish trading activity.
As CoinCentral previously reported, the CFTC announced that such contracts could begin trading on registered exchanges. Chairman Michael Selig described joint oversight by both market regulators.
