On Monday, Coinbase, Kalshi, and four additional firms petitioned a federal court to accept an amicus brief supporting the United States Commodity Futures Trading Commission (CFTC) regarding a legal dispute over perpetual futures tied to individual US equities.
As detailed in the proposed amicus filing presented on Monday by Molly Abraham, legal counsel for Coinbase, the coalition also encompasses Payward (the parent organization of Kraken), trading institutions DRW Holdings and Jump Trading, along with digital asset investment firm Paradigm Operations. These entities maintain that equity perpetual futures are governed by current American futures legislation.
This submission arrives several days after a federal magistrate concluded that the CFTC likely “surpassed its legislative power” by permitting single-stock perpetual contracts to circulate as security futures.
The legal battle could establish whether American trading platforms are permitted to supply retail market participants with non-expiring contracts tracking specific corporate shares.
Why stock perps face scrutiny
On November 3, the CFTC announced that single-stock perpetual futures, often called stock perps, were cleared to begin operations on regulated US trading venues for the very first time.
The Capital Markets Alliance Association (CMAA), a newly established advocacy and trade organization representing conventional financial market participants—whose membership lists features like Cboe and Citadel Securities—filed a lawsuit against the CFTC in the prior week to contest the agency’s jurisdiction in authorizing these instruments.
Stock perpetuals permit speculators to wager on the price fluctuations of individual corporate equities without needing to hold the underlying shares. Unlike standard futures contracts, they possess no predetermined expiration date.
The CMAA contends that because these instruments lack a set maturity date, they ought to be classified as security-based swaps—a category of derivative connected to stocks or similar securities that falls primarily under Securities and Exchange Commission (SEC) regulation and is subject to stricter retail trading controls.
The six corporations siding with the CFTC reject this perspective, asserting that a mandatory expiration date is unnecessary for a contract to constitute a security future, which is regulated jointly by the CFTC and SEC.
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Judge questions CFTC authority but doesn’t halt trading
Following the legal challenge brought by the CMAA, US District Judge Valerie Caproni noted that the plaintiff held a strong likelihood of prevailing on its argument that the CFTC exceeded its statutory mandate by greenlighting stock perpetuals as security futures.
Caproni determined that the instruments appeared to function closer to swaps than security futures, thereby calling the commission’s legal rationale into question.
Even so, she rejected the CMAA’s motion for a temporary restraining order, ruling that the organization failed to prove imminent and irreversible injury. This ruling allowed the CFTC’s authorizations to remain active while the litigation moves forward.
The CMAA is slated to submit its response to the CFTC’s opposition concerning the preliminary injunction request on Tuesday.
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Originally published at https://cointelegraph.com/news/coinbase-kalshi-cftc-stock-perpetual-futures-lawsuit?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
