Crypto Firms File Amicus Brief Defending CFTC Single-Stock Perp Authority

TL;DR

• Amicus Brief: Coinbase, Kalshi, Payward, DRW Holdings, Jump Trading, and Paradigm are seeking court approval to file a brief supporting the CFTC’s authority over single-stock perpetual futures.
• Legal Challenge: The Capital Markets Alliance argues that equity perps should be treated as security-based swaps rather than futures, challenging the regulator’s recent approvals.
• Market Access: Supporting firms contend that U.S. investors should have access to equity perpetual products under existing oversight structures involving both federal market regulators.
  

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A coalition of major crypto and trading firms has moved to support the CFTC in a growing legal dispute over single-stock perpetual futures. Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading, and Paradigm have asked a federal court for permission to file an amicus brief backing the CFTC and its authority to approve the products in the United States.

The filing follows a lawsuit brought by the Capital Markets Alliance (CMA), which is seeking to overturn the CFTC’s approval of equity perpetual futures contracts. The case centers on whether these products fall under the regulator’s jurisdiction or should instead be treated differently under securities laws.

Industry Pushes Back Against CMA Lawsuit

According to the court filing, Coinbase, Kalshi, and Payward have each submitted applications to the CFTC to list equity perpetual contracts tied to U.S. stocks. Those applications were deemed approved on Nov. 2. Perpetual futures, commonly known as perps, allow traders to speculate on price movements without owning the underlying asset.

Unlike traditional futures contracts, they do not have an expiration date. The CMA argues that because equity perps never expire, they should not be classified as futures. Instead, the association claims they are security-based swaps that cannot be listed on CFTC-regulated exchanges. The group further argues that the CFTC’s actions intrude on the authority of the Securities and Exchange Commission.

Firms Highlight SEC Involvement

The firms supporting the CFTC reject that interpretation. In their filing, they argue that the SEC participated in the regulatory process from the beginning and had opportunities to weigh in on the classification of perpetual contracts. According to the brief, both agencies jointly sought public feedback on whether perpetual contracts should be considered security futures.

The supporters of the CFTC contend that this collaborative process undermines claims that the regulator acted outside its authority. Coinbase General Counsel Molly Abraham also stated that under the Commodity Exchange Act and the securities futures framework established by Congress in 2000, security futures products are not swaps.

Debate Over the Future of Equity Perps

The dispute carries significance for the future of equity perpetual products in the U.S. market. Supporters of the CFTC argue that global markets already offer equity perps and that American investors should have access to similar products within a regulated framework. Coinbase Vice Chairman Ryan VanGrack said U.S. investors deserve access to these markets under the joint oversight of the CFTC and SEC. With the lawsuit now underway, the extent of CFTC authority over single-stock perpetual futures is set to face closer judicial scrutiny.