Key Takeaways
- • Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading and Paradigm filed a letter supporting the CFTC in a lawsuit brought by the Capital Markets Alliance in the U.S. District Court for the Southern District of New York.
- • The Capital Markets Alliance, which says it is backed by Cboe and Citadel Securities, argues that single-stock perpetual futures fall under SEC jurisdiction rather than the CFTC's.
- • Applications by Coinbase, Kalshi and Payward to list U.S. stock perpetual futures, contracts with no expiration date, were deemed approved on Nov. 2.
- • A CFTC spokesperson called the lawsuit "troubling" and said markets "should be governed by law, not litigation campaigns intended to block innovation."
Summary
A group of digital asset firms has sided with the U.S. Commodity Futures Trading Commission in a legal dispute over its authority to regulate perpetual futures tied to individual stocks. Coinbase, Kalshi, Kraken's parent company Payward, DRW Holdings, Jump Trading and Paradigm filed a letter in support of the CFTC with the U.S. District Court for the Southern District of New York, according to CoinDesk.
The lawsuit was brought earlier this month by the Capital Markets Alliance (CMA), which challenges the CFTC's approval of open-ended futures contracts on stocks, products comparable to those already traded in the cryptocurrency derivatives market. The CMA says it is backed by traditional finance firms including broker-dealers Cboe and Citadel Securities. It argues that such equity perpetual products would fall under the jurisdiction of the Securities and Exchange Commission rather than the CFTC.
Perpetual futures are derivatives that allow traders to take positions on the future price of an asset and, unlike traditional futures, carry no expiry date. Coinbase, Kalshi and Payward have each submitted applications to list U.S. stock perpetuals, and those applications were deemed approved on Nov. 2.
A CFTC spokesperson described the CMA's action as "troubling" in an email to CoinDesk when the suit was filed on Nov. 3, adding that markets "should be governed by law, not litigation campaigns intended to block innovation." The outcome of the jurisdictional dispute will determine which regulator oversees a growing category of equity derivatives and which trading venues can offer them to U.S. participants.
The lawsuit was brought earlier this month by the Capital Markets Alliance (CMA), which challenges the CFTC's approval of open-ended futures contracts on stocks, products comparable to those already traded in the cryptocurrency derivatives market. The CMA says it is backed by traditional finance firms including broker-dealers Cboe and Citadel Securities. It argues that such equity perpetual products would fall under the jurisdiction of the Securities and Exchange Commission rather than the CFTC.
Perpetual futures are derivatives that allow traders to take positions on the future price of an asset and, unlike traditional futures, carry no expiry date. Coinbase, Kalshi and Payward have each submitted applications to list U.S. stock perpetuals, and those applications were deemed approved on Nov. 2.
A CFTC spokesperson described the CMA's action as "troubling" in an email to CoinDesk when the suit was filed on Nov. 3, adding that markets "should be governed by law, not litigation campaigns intended to block innovation." The outcome of the jurisdictional dispute will determine which regulator oversees a growing category of equity derivatives and which trading venues can offer them to U.S. participants.
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