Key Takeaways
- • Crypto firms including Coinbase, Kraken and Kalshi filed briefs backing the CFTC's position that single-stock perpetual futures are futures rather than swaps, in a lawsuit brought by the Capital Markets Alliance (CMAA).
- • The CMAA, a new group backed by Citadel Securities, Cboe and other traditional securities firms, sued the CFTC seeking an emergency halt to U.S. trading in single-stock perps, arguing they are securities-based swaps under SEC jurisdiction.
- • The crypto industry's brief, filed late Monday in the U.S. District Court for the Southern District of New York, was also signed by Paradigm, DRW Holdings and Jump Trading and asserts that equity perpetuals are security futures.
- • A federal judge initially allowed trading to continue in the CMAA case but signaled she believed the group's CFTC-overreach argument has merit.
- • This is the second legal front in which crypto firms have sided with the CFTC; in the separate CME Group case over crypto perps, the agency has moved to dismiss and that matter awaits judicial action.
Summary
Crypto firms have aligned with the U.S. Commodity Futures Trading Commission in a second legal battle over perpetual futures, according to CoinDesk. The dispute concerns the CFTC's effort to allow single-stock perpetual futures, contracts with no expiration date that let investors speculate on an equity's price indefinitely, to trade in the United States.
Traditional securities firms responded with a lawsuit led by the Capital Markets Alliance, a new organization backed by Citadel Securities, Cboe and other firms. The CMAA sued the regulator for an emergency halt, arguing that single-stock perps fall under the definition of securities-based swaps and therefore belong under the jurisdiction of the Securities and Exchange Commission rather than the CFTC. CoinDesk notes the argument overlaps with the CME Group's separate contention that crypto perps are swaps, though in that case the CFTC would retain jurisdiction but under a different regulatory regime.
In the stock perps case, companies including Coinbase, Kraken and Kalshi have argued that the products are closely related to securities futures and belong in the same regulatory category. A court brief filed late Monday in the U.S. District Court for the Southern District of New York, also signed by Paradigm, DRW Holdings and Jump Trading, argues that stock perps are a superior product to stock futures and that traditional finance members "could offer that better product themselves; instead, CMAA sued and sought emergency relief to keep it off the market." The signatories contend that "the question, then, is not whether equity perpetuals resemble security-based swaps, but whether they are security futures — and they are," adding that both the CFTC and SEC have treated them that way.
A federal judge initially allowed trading to continue in the CMAA case but signaled she believed the group's argument about CFTC overreach has merit. In the CME case over crypto perps, the CFTC has moved to dismiss, and the matter remains pending judicial action.
Traditional securities firms responded with a lawsuit led by the Capital Markets Alliance, a new organization backed by Citadel Securities, Cboe and other firms. The CMAA sued the regulator for an emergency halt, arguing that single-stock perps fall under the definition of securities-based swaps and therefore belong under the jurisdiction of the Securities and Exchange Commission rather than the CFTC. CoinDesk notes the argument overlaps with the CME Group's separate contention that crypto perps are swaps, though in that case the CFTC would retain jurisdiction but under a different regulatory regime.
In the stock perps case, companies including Coinbase, Kraken and Kalshi have argued that the products are closely related to securities futures and belong in the same regulatory category. A court brief filed late Monday in the U.S. District Court for the Southern District of New York, also signed by Paradigm, DRW Holdings and Jump Trading, argues that stock perps are a superior product to stock futures and that traditional finance members "could offer that better product themselves; instead, CMAA sued and sought emergency relief to keep it off the market." The signatories contend that "the question, then, is not whether equity perpetuals resemble security-based swaps, but whether they are security futures — and they are," adding that both the CFTC and SEC have treated them that way.
A federal judge initially allowed trading to continue in the CMAA case but signaled she believed the group's argument about CFTC overreach has merit. In the CME case over crypto perps, the CFTC has moved to dismiss, and the matter remains pending judicial action.
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