Coinbase, Kalshi, Kraken parent Payward and three trading firms are backing the CFTC in federal court against a Citadel- and Cboe-backed lawsuit that seeks to halt U.S. stock perpetual futures. The fight hinges on one question: are these never-expiring contracts security futures the CFTC can approve, or security-based swaps that belong to the SEC? A judge has let trading continue but signaled the challengers may win.
Crypto Rallies Behind Its Regulator
Crypto and prediction-market heavyweights have stepped into a Manhattan courtroom to defend Washington’s newest market experiment. On Monday, Nov. 9, Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading and Paradigm asked the U.S. District Court for the Southern District of New York to accept a brief supporting the Commodity Futures Trading Commission (CFTC).
Their opponent is the Capital Markets Alliance (CMA), a newly formed trade group whose members include Cboe and Citadel Securities. The CMA wants the CFTC’s approval of single-stock perpetual futures thrown out and trading halted while the case proceeds.
The stakes are commercial too. Coinbase, Kalshi and Payward all applied to list perpetual futures on U.S. stocks, and those applications were deemed approved on Nov. 2. CFTC Chairman Michael Selig announced the next day that eligible exchanges could offer the contracts. The CMA sued within hours.
Crypto is now teamed up with U.S. government in two legal battles over perps
What Is a Stock Perpetual Future?
A perpetual future, or “perp,” is a derivative that lets traders bet on an asset’s price without owning the asset. Unlike a standard futures contract, it never expires. Traders never roll positions into a new contract.
To keep the contract’s price tied to the real asset, perps use periodic funding payments. When the perp trades above the underlying, longs pay shorts; when below, the flow reverses.
Perps are the workhorse of offshore crypto exchanges, where they are often traded with heavy leverage. A stock perp applies the same design to a single company’s shares. A U.S. trader could hold a leveraged position on one stock indefinitely without owning the shares.
Futures or Swaps? A Fight Over a Label
The case turns on a definition. Under U.S. law, a derivative on a single stock can be a “security future,” overseen jointly by the CFTC and the Securities and Exchange Commission (SEC), or a “security-based swap,” which falls to the SEC.
The CMA argues that a contract with no expiry and recurring funding payments behaves like a swap, not a future. If that is right, the CFTC had no authority to approve the products. They would instead fall under the SEC’s swaps regime, which generally keeps such instruments away from ordinary retail traders.
The CFTC has been blunt. A spokesperson called the lawsuit “troubling” and said markets “should be governed by law, not litigation campaigns intended to block innovation.”
The Crypto Firms’ Counterargument
The six companies reframe the question. Whether stock perps resemble swaps, they argue, is beside the point. The test is whether they qualify as security futures, and the brief states flatly that they do.
The filers also push back on the idea that the CFTC is sidestepping the SEC. They note that the two agencies jointly sought public comment on whether perpetual contracts should be classified as security futures. In their telling, both regulators of that category already treat the products as belonging to it.
The brief also takes a commercial swipe, calling stock perps a better product than conventional single-stock futures. The alliance’s members could have built it themselves, the firms argue, but went to court to keep a competitor off the market instead.
A Second Front, and a Warning From the Bench
This is the industry’s second stand with the CFTC over perps. In June, CME Group sued the agency in Washington, D.C., federal court over its May 29 approval of a Kalshi bitcoin perpetual, arguing such contracts are swaps under the Dodd-Frank Act. The CFTC called that suit frivolous and has moved to dismiss it; the court has yet to rule.
The two cases differ in one crucial way. If CME wins, crypto perps would stay under the CFTC, just under the tougher swaps rulebook. If the CMA wins, stock perps could leave the CFTC’s reach entirely. Crypto firms left the CME fight to the agency but filed their own arguments here.
The bench has already sounded a warning. U.S. District Judge Valerie Caproni allowed trading to continue for now. She also found the CMA likely to succeed on its claim that the CFTC exceeded its statutory authority.
Who Controls the Market Next
The dispute sits inside a larger policy push. Regulators under President Donald Trump have been directed to bring the thriving offshore perps market onshore. Selig, currently the CFTC’s only commissioner, has framed the approvals as part of the agency’s mandate to promote responsible innovation.
Wall Street is not uniformly opposed to perps, either. On Oct. 29, NYSE owner Intercontinental Exchange announced a partnership with Trade.xyz to build U.S.-regulated perpetual venues on Hyperliquid technology. The real contest is less about whether perps come to America than about who runs the market and under which rulebook.
For now, stock perps can trade, but their future rests with Judge Caproni. She must decide whether to accept the industry brief and whether to grant the CMA’s request to halt trading. Her early view that the CFTC likely overstepped means traders and exchanges should prepare for either outcome.
